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RESOLUTION NO. 07-27

CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY

RESOLUTION APPROVING ASSOCIATE MEMBERSHIP BY THE COUNTY OF SAN BERNARDINO IN THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY AND THE EXECUTION OF AN ASSOCIATE MEMBERSHIP AGREEMENT RELATING TO ASSOCIATE MEMBERSHIP OF THE COUNTY IN THE AUTHORITY

WHEREAS, pursuant to the provisions of the Joint Powers Act, comprising Articles 1 , 2, 3 and 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the Government Code of the State of California, the cities of Eureka, Lancaster and Selma entered into a joint exercise of powers agreement (the "Agreement") pursuant to which the California Enterprise Development Authority (the "Authority") was organized;

WHEREAS, pursuant to Section 2.10 of the Agreement, a local agency may be admitted as an associate member of the Authority upon approval of the Board of Directors of the Authority and the adoption by the legislative body of the local agency of a resolution approving an Associate Membership Agreement; and

WHEREAS, the County of San Bemardino (the "County"), wishes to join the Authority and has passed the requisite resolution approving the County becoming an associate member of the Authority and has approved an Associate Membership Agreement; and

WHEREAS, the Board of Directors desires to admit the County into the Authority as an associate member~

NOW THEREFORE, BE IT RESOLVED by the Board of Directors of the Califomia Enterprise Development Auth_ority, as follows:

Section 1. The County is hereby admitted as a new associate member of the Authority.

Section 2. The Chairman or the Vice Chairman of the Board of Directors is hereby authorized to execute the Associate Membership Agreement with the County. All actions heretofore taken by the officers, or their respective designees, employees and agents of the Authority in connection with the the Authority's entry into the Associate Membership Agreement with the County are hereby ratified and confirmed.

Section 3. This resolution shall take effect immediately upon its adoption.

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PASSED AND ADOPTED this 27' 11 day of September, 2007.

ATTEST:


2

I, the undersigned. the duly ctppoimecl and qualified Secretary of the California Enterprise Development Authority. do hereby certiJ~,. that the foregoing resolution was duly adopted by the Board of Directors of said Authority at a duly called meeting of the Board of Directors of said Authority held in accordanee \;l,1ith law on September 27, 2007.

Bruce Ackerman, Secretary

6


RESOLUTION APPROVING ASSOCIATE MEMBERSHIP BY THE COUNTY OF SAN BERNARDINO IN THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY AND AUTHORIZING AND · DIRECTING THE EXECUTION OF AN ASSOCIATE MEMBERSHIP AGREEMENT RELATING TO ASSOCIATE MEMBERSHIP OF THE COUNTY IN THE AUTHORITY

On a motion by Supervisor Hansberger, duly seconded by Supervisor Mitzelfelt, the foregoing Resolution was passed and adopted by the Board of Supervisors of the County of San Bernardino, State of California this 25th day of September, 2007: ·

WHEREAS, the County of Sari Bernardino, California (the "County"), a political subdivision, duly organized and existing under the Constitution and the laws of the State of California; and

WHEREAS, the County, upon authorization of the Board of Supervisors, may pursuant to Chapter 5 of Division 7 of Title I of the Govem.rnent Code of the State of California, commencing with Section 6500 (the "JPA Law") enter into a joint exercise of powers agreement with one or more other. public agencies pursuant to which such contracting parties may jointly exercise any power c·ommon to them; and

WHEREAS, the · County and other public agencies wish to jointly participate in economic development financing programs for the benefit of businesses and nonprofit entities within their" jurisdictions offered by membership in the California Enterprise Development Authority (the "Authority") pursuant to an associate membership agreement and Joint Exercise of Powers Agreement Relating to the California Enterprise Development Authority (the "A!!reement")· and

t:> '

WHEREAS, under the JP A Law and the Agreement, the Authority is a public entity separate and apart from the parties to the Agreement and the debts, liabilities and obligations of the Authority will not be the debts, liabilities or obligations of the· County or the other members of the Authority; and

··- ---~- -· _ .W!!EREASLtl)~.form_of Ass_9ciate Membershi2_6.S!:..~~~~~tjtl)~~·~~~~cia!~-M~JPper~hip ______________ _ Agreement") between the County and the Authority is attached; and

WHEREAS, the County is willing to become an Associate Member of the Authority subject to the provisions of the Associate Membership Agreement.

NOW, THEREFORE, BE IT RESOLVED, that the Board of Supervisors of the County of San Bernardino, hereby finds, determines and declares as follows:

4811-5618-2273.1

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Section 1. The Board of Supervisors hereby specifically finds and declares that the actions authorized hereby constitute and are with respect to public affairs of the County, and that the statements, findings and determination.s of the County set forth in the preambles above and of the documents approved herein are true and-correct.

Section 2. The Associate Membership Agreement presented to this meeting and on file with the Clerk of the Board of Supervisors is hereby approved. The Chair of the Board, the County Administrative Officer, the Clerk of the Board and other officers or officials of the County are each hereby authorized and directed, for and on behalf of the County, to execute and deliver the Associate Membership Agreement in substantially said form, with such changes therein as such officer may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof.

Section 3. The officers and officials of the County are hereby authorized and directed, jointly and severally, to do any and all- things and to execute and deliver any and all documents which theymay deem necessary or advisable in order to consummate, carry out, give effect to and comply with the terms and intent of this resolution and the Associate Membership Agreement. All such actions heretofore taken by such officers and officials are hereby confirmed, ratified ap.d approved.

Section 4. This resolution shall take effect immediately upon its passage.

A YES: Supervisors, Mitzelfelt, Biane, Hansberger

NOES: Supervisors, None

ABSENT: Supervisors, Ovitt, Gonzales

ABSTAIN: Supervisors, None

481 I-561S-2273.1 2

CERTIFICATE OF CLERK OF THE BOARD OF SUPERVISORS COUNTY OF SAN BERNARDINO

I, DENA M. SMITH, Clerk of the Board of Supervisors of the County of San Bernardino, hereby certify that the foregoing is a full, true and correct copy of a resolution duly adopted at the meeting of the Board of Supervisors of the County of San Bernardino duly and regularly held in Covington Chambers on the First Floor of the County Government Center, 385 North Arrowhead Avenue, San Bernardino, California, on September 25, 2007, of which meeting all of the members of said Board had due notice.

c I further certify that I have carefully compared the foregoing copy with the original

minutes of said meeting on file and of record in my office; that said copy is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes; and that said resolution has not been amended, modified, rescinded or revoked in any manner since the date of its adoption, and the same is now in full force and effect.

IN WITNESS WHEREOF, I have executed this certificate this 25th day of September, 2007, Item 68, miL

*S I I -5618-2273. I 3

REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS OF SAN BERNARDINO COUNTY, CALIFORNIA

AND RECORD OF ACTipN

September 25, 2007

FROM: GARY MCBRIDE, Deputy Administrative Officer _County Administrative Office

SUBJECT: MEMBERSHIP IN CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY AND TAX-EXEMPT FINANCING FOR THE BENEFIT OF LOMA LINDA UNIVERSITY MEDICAL CENTER

RECOMMENDATIONS: 1. Adopt Resolution No. 2007-324 approving associate membership by the County of San

Bernardino in the California Enterprise Development Authority and authorizing and directing the execution of an associate membership agreement. AGREEMENT NO. 07-822

2. Conduct a Tax Equity and Fiscal Responsibility Act (TEFRA) public hearing regarding the issu.ance of up to $24,000,000 of bonds by the California Enterprise Development Authority for the purpose of financing facilities for the benefit of Lorna Linda Healthcare Properties, LLC, Lorna Linda University Medical Center, Lorna Linda University and/or a related or successor entity.

3. Adopt Resolution No. 07-325 approving the issuance by California Enterprise Development Authority of not to exceed $24,000,000 aggregate principal~amountof the Authority's revenue bonqs for the benefit of Lorna Linda Healthcare Properties, LLC, Lorna Linda University Mei:lical Center, Lorna Linda University and/or a related or successor entity for the purpose of financing or refinancing the cost of the acquisition, and installation of certain facilities, providing the terms and conditions for such bonds and other matters relating thereto. '

BACKGROUND INFORMATION: Approval of this item will allow the California Enterprise Development authority (CEDA) to issue up to $24,000,000 of tax-exempt bonds, proceeds of which will be loaned to Lorna Linda Healthcare Properties, LLC, Lorna Linda University Medical Center, Lorna Linda University and/or a related or successor entity (collectively, LLUMC) and used for projects including: (1) the acquisition, installation and equipping of the real property and medical facilities located at 11234 Anderson Street ("Anderson Street property"), Lorna Linda, California; (2) the acquisition and installation of medical and related equipment at the Anderson

I Street property, (3) the construction and installation of interior and exterior improvements to leased property located at 900 East Washington Street ("Washington Street property"), Colton California, (4) the acquisition and installation of medical equipment and other equipment, furniture and furnishings for use at the Washington Street property, (5) the construction and installation of interior and exterior improvements to the real property located at 25455 Barton Road ("Barton ·

cc: With Resolution: GAO-McBride w/3 agreements

for signature CEDA c/o CAO ACR-Accounts Payable Manager

w/agreement Periculum w/agreement Risk Management CC-Biakemore CAO-Turturro File w/agreement

mil 09/26/07

MOTION

Page 1 of 2

ABSENT 5

ITEM 068

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BOARD OF SUPERVISORS MEMBERSHIP IN CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY AND TAX-EXEMPT FINANCING FOR THE BENEFIT OF LOMA LINDA UNIVERSITY MEDICAL CENTER SEPTEMBER 25,2007 PAGE 2 OF 2

Road property"), Loma Linda, California (6) the refinancing of existing indebtedness incurred in connection with the acquisition, construction, installation and equipping of the Barton Road property. LLUMC, through one or more of the related entities, will own and operate these facilities. The Bonds will be paid entirely from repayments by LLUMC under a Loan agreement(s) with CEDA.

In order to issue the bonds as tax-exempt, the issuance must be approved by a governmental unit with elected representatives and jurisdiction over the area in which the project is to be financed after that unit has conducted a public hearing following reasonable public notice.

Recommendation number one makes San Bernardino County an associate member of CEDA. For CEDA to have jurisdiction to issue conduit bonds on behalf of LLUMC or any other nonprofit public benefit corporation located within the County, the County must become a member. There are no costs associated with membership in CEDA and obligations of CEDA do not constitute debts, liabilities or obligations of members of CEDA. Participation by the County in CEDA will not impact the County's appropriation limits and will not constitute any type of indebtedness by the County. CEDA was created on June 1, 2006 to assist members and for-profit and nonprofit organizations located within the jurisdictions of the members in financing industrial and commercial development projects and other public purpose projects. CEDA currently has 3 members (cities) and 10 associate members ( 5 counties and 5 cities).

Recommendation number two conducts· the public TEFRA hearing that is required prior to approval of these types of tax-exempt conduit financings. The publication of notice of the hearing occurred on September 11, 2007.

Recommendation number three approves the issuance of up $24,000,000 in tax-exempt debt by CEDA on behalf of LLUMC.

REVIEW BY OTHERS: This item has been reviewed by County Counsel (Michelle Blakemore, Deputy County Counsel, 387-5445) on September 18, 2007; and the Administrative Office (Katrina Turturro, Principal Administrative Analyst, 387-3076) on September 18, 2007.

FINANCIAL IMPACT: The bond issuance is the sole responsibility of the borrower ·and the County has no contractual, financial, legal, or moral obligation for the repayment of these bonds.

SUPERVISORIAL DISTRICT(S): Third

PRESENTER: Gary McBride, Deputy Administrative Officer, 387-4599

09/25/07 068

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.()

(_)

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ASSOCIATE MEMBERSHIP AGREEMENT

by and between the


and the

COUNTY OF SAN BERNARDINO, CALIFORNIA

THIS ASSOCIATE MEMBERSHIP AGREEMENT (this "Associate Membership Agreemenf'), dated as of September 25, 2007 by and between CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY (the "Authority") and the COUNTY OF SAN BERNARDINO, CALIFORNIA, a political subdivision, duly organized and existing under the laws of the State of California (the "County");

WITNESSETH:

WHEREAS, the Cities of Selma, Lancaster .and Eureka (individually, a "Member" and collectively, the "Members"), have entered into a Joint Powers Agreement, dated as of June 1, 2006 (the "Agreement"), establishing the Authority and prescribing.its purposes and powers; and

WHEREAS, the Agreement designates the Executive Committee of the ·Board of Directors and the President of the California Association for Local Economic Development as the initial Board of Directors of the Authority; and

WHEREAS, the Authority has been formed for the purpose, among others, to assist for profit and nonprofit corporations and other entities to obtain financing for projects and purposes serving the public interest; and

WHEREAS, the Agreement permits any other local agency in the State of California to join the Authority as an associate member (an "Associate Member"); and

WHEREAS, the County desires to become an Associate Member of the Authority;

WHEREAS, Board of Supervisors of the County has adopted a resolution approving the Associate Membership Agreement and the execution and delivery thereof;

WHEREAS, the Board of Directors of the Authority has determined that the County should become an Associate Member of the Authority;

NOW, THEREFORE, in consideration of the above premises and of the mutual promises herein contained, the Authority and the County .do hereby agree as follows:

4816-0150-1953.1

,-

..

(.#)•.·• Section 1. Associate Member Status. The County is hereby made an Associate Member

of the Authority for all purposes of the Agreement and the Bylaws of the Authority, the provisions of which are hereby incorporated herein by reference. From and after the date of

()

execution and delivery of this Associate Membership Agreement by the County and the Authority, the County shall be and remain an Associate Member of the Authority.

Section 2. Restrictions and Rights of Associate Members. The County shall not have the right, as an Associate Member of the Authority, to vote on any action taken by the Board of Directors or by the Voting Members of the Authority. In addition, no officer, employee or representative of the County shall have any right to become an officer or director of the Authority by virtue of the County being an Associate Member of the Authority.

Section 3. Effect of Prior Authority Actions. The County hereby agrees to be subject to and bound by all actions previously taken by the Members and the Board of Directors of the Authority to the same extent as the Members of the Authority are subject to and bound by such actions .

. Section 4. No Obligations of Associate Members. The debts, liabilities and obligations of the Authority shall not be the debts, liabilities and obligations of the County.

Section 5. Execution of the Agreement. Execution of this Associate Membership Agreement and the Agreement shall satisfy the requirements of the Agreement and Article XII of the Bylaws of the Authority for participation by the County in all programs and other undertakings of the Authority.

4816-0150-1953.1 2

..

IN WITNESS WHEREOF, the parties hereto have caused this Associate Membership Agreement to be executed and attested by their proper officers thereunto duly authorized, on the day and year first set forth· above.

Attest: .· .· ~::;;/ •••P • • •

' ..... . :{f:l:;,_~ ---1!--·

Bruce Ackerman, Secretary

Dena M. Smith, Clerk of the Board of Supe

4816-0150-1953.1


By:?(-~ Board of Directors

SEP 2 5 2007

3.


RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF SAN BERNARDINO APPROVING THE ISSUANCE BY CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY OF NOT TO EXCEED $20,000,000 AGGREGATE PRINCIPAL AMOUNT OF THE AUTHORITY'S REVENUE BONDS FOR. THE BENEFIT OF LOMA LINDA UNIVERSITY MEDICAL CENTER AND/OR A RELATED OR SUCCESSOR ENTITY FOR THE PURPOSE OF FINANCING OR REFINANCING THE COST OF THE ·ACQUISITION, CONSTRUCTION AND INSTALLATION OF CERTAIN FACILITIES AND EQUIPMENT, PROVID.ING THE TERMS AND CONDITIONS FOR SUCH BONDS AND ·OTHER MATTERS RELATING THERETO HEREIN SPECIFIED

On Tuesday, June 9, 2009, on motion of Supervisor Gonzales, duly · seconded by Supervise~ Derry and carried, the following resolution is adopted by the Board of Supervisors of San Bernardino County, State of California.

WHEREAS, Lorna Linda University Medical Center and/or a related ot successor entity (collectively, the "Borrower") has requested that· California Enterprise Development Authority (the "Authority") issue its tax-exempt and/or taxable revenue bonds in an aggregate principal amount not to exceed $20,000,000 (the "Bonds") for the benefrt of the Borrower pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code of the State, (commencing with Section 6500). (the "Act") to loan the proceeds of

· the Bonds to the Borrower pursuant to one or more loan agreements (the "Loan Agr~ement").: ·

' WHEREAS, the proceeds of the Bonds loaned to the Bormwer will be applied to

finance, refinance or reimburse the Borrower for the cost of construction and installation of various real property improvements and the acqUisition and installation of equipment at. one or more of the following locations: 11234 Anderson Street, Lorna Linda, California, 25333 Barton Road, Lorna Linda, California, 25455 Barton Road, Lorna Lin9a, California, 11406 Lorna Linda Drive, Lorna Linda, California, 11370 Anderson Street, Lorna Linda, California, 11375 Anderson Street, Lorna Linda, ·california, 26780 Barton· Road, Redlands, California, 1686 Barton Road, Redlands, California, 1690 Barton Road, Redlands, California, 1710 Barton Road, Redlands, California and 900 East Washington Street, Colton, California (collectively, the ~'Facilities");·

· WHEREAS, the proceeds of the Bonds may also be used to (1) pay capitalized interest with respect to the financing, (2) fund a reserve fund, if necessa,.Y, with respect to the financing and (3) pay certain costs of issuance in connection with the financing;

WHEREAS, the issuance of the Bonds by the Authority must be approved by the governmental unit on behalf of which the Bonds are issued and a governmental unit having jurisdiction over the territorial limits in which the Facilities are located pursuant to

4850-4928-8707.1

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the public approval requirement of Section .147(f) of the Internal Revenue Code of 1986, as amended (the "Code");

WHEREAS, the Facilities are located within the territorial limits of the County of San Bernardino (the "County") and the Board of Supervisors of the County (the "Board of Supervis~rs") is the elected legislative body of the County; and

WHEREAS, the Authority and the Borrower have requested that the Board of Supervisors approve the issuance of th~ Bonds by the Authority and the financing of the

·Facilities with the proceeds of the Bonds pursuant to Section 147(f) of the Code; and . .

WHEREAS, it is intended that this Resolution shall comply with the public approval requirements of Section 147(f) of the Code; provided, however, that this Resolution is neither intended to nor shall it constitute an approval by the Board of Supervisors of the Facilities for any other purpose; and ·

WHEREAS, a public hearing was held by the Board of Supervisors on the 9th day of June, 2009, at the meeting which commen~ed at the hour of 10:00 a.m., at Covington Chambers, First Floor, County of San Bernardino, 385 North Arrowhead Avenue, San Bernardino, California 92415, following duly published notice thereof in a newspaper of general circulation in the Co!Jnty Qf .. S~n Bernardino, on May 25, 2.009, and all persons desiring· to be heard ha'{e been heard:· · .

. . ....... . '-1 Jt.~, ..

NOW, THEREFOR,.E, ~E IT RE$0LVE;D, .. DETERMINED AND ORDERED by the Board of Supervisors of the. County of San Bernardino as follows: .

Section 1. The Board of Supervisors hereby approves the. issu~nce of the · Bonds, which Bonds may bs tax.:ex~!TJpt qr taxable as approved by the Authority in its resolution, in an amount not to exceed $20',000,000 to finance the costs of the Facilities. This resolution shall constitute "host" approval of the issuance of the Bonds within the meaning of Section 147(f) of the Code and shaU constitute the approval of the issuance of the Bonds within the· meaning of the Act; provided, however, that this Resolution shall not constitute an approval by the Board of Supervisors of the Facilities for any other purposes, including compliance thereof with CEQA, .nor does it constitute an approval of the underlying credit or financi~l structure .of the Bonds.

Section 2. All actions heretofore taken by the officers, employees and agents of the County with respect to the approval of the Bonds are hereby' approved, confirmed and ratified, and the officers and employees of the County and their authorized deputies and agents are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all certificates and documents which they or bond counsel may deem necessary or advisable in order to consummate the issuance, sale and delivery of the Bonds and otherwise to effectuate the purposes .of this Resolution.

2

Section 3. This Resolution shall take effect from and after its adoption.

. PASSED AND ADTOPED by the Board of Supervisors of the County of San ~ernardino, State of California, by the following vote: ·

AYES:

NOES:

ABSENT:

ABSTAIN:

****

Supervisors:

Supervisors:

Supervisors:

Supervisors:

Mitzelfelt, Derry, Ovitt, Gonzales

None

Biane.

None

·sTATE OF CALIFORNIA )

COUNTY ·OF SAN BERNARDINO )

I, DENA M. SMITH, Clerk of the Board of Supervisors of the County of San Bernardino, hereby certify that the foregoing is a full, true and correct copy of the action taken by the Board of Supervisors, by vote of the members present, as the same appears in the Official Minutes of said Board at is · g).,gj June 9, 2009. #78 jr

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3

Rev0708R1

. REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS OF SAN BERNARDINO COUNTY, CALIFORNIA

AND RECORD OF ACTION

June 9, 2009

FROM: GARY MCBRIDE, Deputy Administrative Officer· County Administrative Office

SUBJECT: LOMA LINDA UNIVERSITY MEDICAL CENTER TAX EXEMPT FINANCING

Conduct a Tax Equity and Fiscal Responsibility Act (TEFRA) public hearing regarding the issuance of up to $20,000,000 of tax-exempt ·conduit bonds tq finance or refinance the costs of the acquisition, construction, equipping and renovation of facilities for Loma Linda University Medical Center and/or affiliates. The facilities are located in Lorna linda, Redlands, and Colton, California. Adopt Resolution No. 2009-120 approving the issuance of the California Enterprise

. Development Authority, in an aggregate principal amount not to exceed $20,000,000, for the purpose of financing and refinancing the acquisition, construction, equipping and renovation of facilities and certain other·matters relating thereto.

nn•···"''"'' of this item wi!l allow Lorna Linda University Medical Center, working with the California Enterprise Development Authority (CEDA}, to issue up to $20,000,000 of tax-exempt bonds: The proposed financing includes equipment and/or capital projects at eleven locations within the cities of Colton, Loma Linda, and Redlands.

In order to issue the bonds as ·tax-exempt, the issuance must be approved ·by a governmental unit with elected representatives and· jurisdiction over the area in which the project is to be tfln~n· .. ·o: •rt after that unit has conducted a public hearing following reasonable public notice.

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DENA rin.

BY

ITEM 078 DATED:

BOARD OF SUPERVISORS LOMA LINDA UNIVERSITY MEDICAL CENTER TAX EXEMPT FINANCING JUNE 9, 2009 . PAGE 2 OF 2

San Bernardino County is a member of the CEDA and obligations of .the CEDA do not constitute debts, liabilities or obligations of members executing the agreement Participation by the County in the. CEDA will not impac! the County's appropriation limits and will not constitute any type of indebtedness by the County. ·

Recommendation number one conducts the public TEFRA hearing ·that is required prior to approval of these types of tax-exempt conduit financings. ·

Recommendation number two approves the issuance of up $20,000,000 in tax-exempt debt by CEDA on behalf of Lama Linda University Medical Center.

FINANCIAL IMPACT The bond issuance is the sole responsibility of the borrower and the County has no contractual, financial, legal, or moral obligation for the repayment of these bonds. A portion of the initial issuance fee will be remitted to the County (estimated at $2,500) and will cover costs of legal and

· staff tin:'e associated with this hearing. · · ·

REVIEW BY OTHERS This item has been reviewed by County Counsel (Michelle Blakemore, Deputy County Counsel, 387-5445) on June 2, 2009 and the County Administrative Office (Katrina Turturro, Principal Administrative Analyst, 387-3076) on June 2, 2009. ·

6/9/09 #78

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· ..

Rev 0708R1

REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS OF SAN BERNARDINO COUNTY, CALIFORNIA ,

AND RECORD OF ACTION

June 9, 2009

FROM: GARY MCBRIDE, Deputy Administrative Officer County Administrative Office

78

SUBJECT: LOMA LINDA UNIVERSITY MEDICAL CENTER TAX EXEMPT FINANCING

RECOMMENDATIONCSl 1. Conduct a Tax Equity and Fiscal Responsibility Act {TEFRA) public hearing regarding the

issuance of up to $20,000,000 of tax-exempt conduit bonds to finance or refinance the costs of the acquisition, construction, equipping and renovation of facilities for Loma Linda University Medical Center and/or affiliates. The facilities are located in Loma Linda, Redlands, and Colton, California.

2. Adopt Resolution approving the issuance of the California Enterprise Development Authority, in an aggregate principal amount not to exceed $20,000,000, for the purpose of financing and refinancing the acquisition, construction, equipping and renovation of facilities and certain other matters relating thereto.

{Affected Districts: Third and Fifth) (Presenter: Gary McBride, Deputy Administrative Officer, 387-4599)

BACKGROUND INFORMATION Approval of this item will allow Loma Linda University Medical Center, working with the California Enterprise Development Authority {CEDA), to issue up to $20,000,000 of tax-exempt bonds. The proposed financing includes equipment and/or capital projects at eleven locations within the cities of Colton, Loma Linda, and Redlands.

In order to issue the bonds as tax-exempt, the issuance must be approved by a governmental unit with elected representatives and jurisdiction over the area in which the project is to be financed after that unit has conducted a public hearing following reasonable public notice.

San Bernardino County is a member of the CEDA and obligations of the CEDA do not constitute debts, liabilities or obligations of members executing the agreement. Participation by the County in the CEDA will not impact the County's appropriation limits and will not constitute any type of indebtedness by the County.

Recommendation number one conducts the public TEFRA hearing that is required prior to approval of these types of tax-exempt conduit financings.

Page 1 of 2

BOARD OF SUPERVISORS LOMA LINDA UNIVERSITY MEDICAL CENTER TAX EXEMPT FINANCING 7 8 JUNE 9, 2009 PAGE20F2

Recommendation number two approves the issuance of up $20,000,000 in tax-exempt debt by CEDA on behalf of Lama Linda University Medical Center.

FINANCIAL IMPACT The bond issuance is the sole responsibility of the borrower and the County has no contractual, financial, legal, or moral obligation for the repayment of these bonds. A portion of the initial issuance fee will be remitted to the County {estimated at $2,500) and will cover costs of legal and staff time associated with this hearing.

REVIEW BY OTHERS This item has been reviewed by County Counsel {Michelle Blakemore, Deputy County Counsel, 387-5445) on June 2, 2009 and the County Administrative Office (Katrina Turturro, Principal Administrative Analyst, 387-3076) on June 2, 2009.

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4832- I I 40-8388.4

ESCROW AGREEMENT .

among

CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY,

as Authority,

SIEMENS PUBLIC, INC.,

as Lender,

LOMA LINDA UNIVERSITY MEDICAL CENTER,

as Borrower

and

LOMA LINDA UNIVERSITY,

as Escrow Agent

Dated as of December 1, 2009

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ESCROW AGREEMENT

THIS ESCROW AGREEMENT is made and entered into as of December 1, 2009 (this "Agreement"), by and among the CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY, a public entity duly organized and validly existing under the laws of the State of California ("Authority"), LOMA LINDA UNIVERSITY, a California nonprofit religious corporation ("Escrow Agent"), SIEMENS PUBLIC, INC. ("Lender"), and LOMA LINDA UNIVERSITY MEDICAL CENTER, a nonprofit religious corporation existing under the laws of the State of California (the "Borrower").

In the joint and mutual exercise of their powers, and in consideration of the mutual covenants herein contained, the parties hereto recite and agree as follows:

ARTICLE I

RECITALS

Section 1.01. Loan Agreement. Authority, Lender and Borrower have entered into a Loan Agreement, dated as of December 1, 2009 (the "Loan Agreement"), whereby Lender and Authority have agreed to finance and refinance for Borrower the acquisition of a medical office building and the acquisition, construction, installation and equipping of certain capital improvements to Borrower's campus, as described in the Loan Agreement and Borrower has agreed to make Loan Payments (as defined in the Loan Agreement) to Lender, as assignee of Authority, in the manner and on the terms set forth therein. This Agreement is not intended to alter or change the rights and obligations of Lender, Authority and Borrower under the Loan Agreement, but is entirely 'supplemental thereto.

Section 1.02. Definitions. The terms capitalized in this Agreement but not defined herein shall have the meanings given to them in the Loan Agreement.

- Section 1.03. Deposit of Proceeds. Under the Loan Agreement, upon the satisfaction of certain conditions precedent, Lender is required to deposit or cause to be deposited with Escrow Agent the sum of $5,324,588.72 (the "Proceeds"). The Proceeds shall be deposited into the funds established in Section 2.01 of this Agreement and disbursed for Project Costs relating to the improvements in the manner and pursuant to the terms set forth in Article III hereof.

Section 1.04. Completion of Improvements. Borrower will cause the Improvements to be acquired, constructed and installed in accordance with the Loan Agreement.

Section 1.05. Escrow Agent. Lender, Authority and Borrower agree to employ Escrow Agent to receive, hold, invest and disburse the Proceeds; provided, however, Escrow Agent shall not be obligated to assume or perform any obligation of Lender, Authority or Borrower or any Vendor or Contractor with respect thereto or unaer the Loan Agreement by reason of anything contained in this Agreement.

4832-1140-8388A

Section 1.06. Authority. Each of the parties has authority to enter into this Agreement, and has taken all actions necessary to authorize the execution of this Agreement by the officers whose signatures are affixed hereto.

ARTICLE II

ESTABLISHMENT OF FUNDS AND DEPOSITS

Section 2.01. Establishment of Funds. Escrow Agent shall establish a special escrow fund designated as the "Siemens Public, Inc./LLLUMC 2009 Escrow Fund" (the "Escrow Fund"), shall account for such Escrow Fund separate and apart from all other funds and moneys held by it and shall administer such Escrow Fund as provided in this Agreement.

Section 2.02. Deposit of Proceeds. All moneys paid to Escrow Agent by Lender pursuant to Section 1.03 of this Agreement shall be deposited with the Escrow Agent, who shall forthwith set aside such proceeds in the Escrow Fund. The moneys in the Escrow Fund shall be used and withdrawn by the Escrow Agent to pay the cost of the Improvements. All deposits into the Escrow Fund shall be by wire transfer as follows:

BANK OF AMERICA NT & SA RIVERSIDE CA ABA NO: 026009593 FBO: LOMA LINDA UNIVERSITY

ACCOUNT NO: 1496 4 50584 REFERENCE: A2139 Siemens LLUMC 2009 Escrow Fund

Section 2.03. Payment to Lender. Upon the earlier of (i) receipt of written notice from Borrower that the purchase, installation and construction of the Improvem.ents is complete, or (ii) December 21, 2012, Escrow Agent shall pay: (a) to Lender an amount equal to the entire remaining balance on deposit in the Escrow Fund, less the sum of (i) an amount equal to the Project Cost of all portions of the Improvements for which Escrow Agent has received a fully . and properly completed Payment Request Form and which has not been paid (Escrow Agent is entitled to. conclusively rely upon the signed Payment Request Forms with no responsibility to review any supporting documents attached thereto) and (ii) the amount of any deposit by Borrower pursuant to Section 4.04 hereof remaining on deposit in the Escrow Fund; and (b) to Borrower the entire remaining balance on deposit in the Escrow Fund after the application of clause (a) hereof less the amount referred to in clause (a)(i) of this Section. The amount paid to · Lender shall be applied in accordance with the Loan Agreement.

Section 2.04. Notice From Lender. Upon receipt of written notice from Lender or Borrower that an Event of Default has occurred under the Loan Agreement or that Borrower is unable to or has determined not to complete the acquisition, construction, equipping or installation of the Improvements or any portion of the Improvements, Escrow Agent shall liquidate all investments held in the Escrow Fund and transfer the proceeds thereof and all other moneys beld in the Escrow Fund to Lender to be applied to amounts owed to Lender in accordance with the Loan Agreement.

4832-1140-8388.4 2

"l I

i.

I !

I

Section 2.05. Responsibility of Escrow Agent. Escrow Agent shall only be responsible for the safekeeping and investment of the moneys held in the Escrow Fund, and the disbursement thereof in accordance with this Article and Article V, and shall not be responsible for the authenticity or accuracy of such certifications or documents, the application of amounts paid pursuant to such certifications by the persons or entities to which they are paid, or the sufficiency of the moneys credited to the Escrow Fund to makethe payments herein required.

ARTICLE III

DISBURSEMENT PROVISIONS

Section 3.01. Disbursement Conditions. In addition to the requirements set forth in this Agreement, all disbursements from the funds created under Article II above shall be subject to the terms, conditions and requirements set forth in Article IV of the Loan Agreement.

Section 3.02. Reserved.

Section 3.03. Application of Moneys in the Escrow Fund. The moneys in the Escrow Fund shall be used and withdrawn by the Borrower to pay the Project Costs in connection with the Improvements, upon receipt by Escrow Agent with respect thereto of a Draw Request in the form attached hereto as Exhibit A, executed by or on behalf of Borrower, fully completed and with supporting documents attached thereto. Borrower shall provide a copy of each completed Draw Request to Lender at its address set forth below and at 1811 Sardis Road North, Suite 207, Charlotte, NC 28270, Attention: Henry Bradley. Escrow Agent may conclusively rely upon the signed Draw Request and shall not be responsible to review the supporting documents attached thereto. Upon receipt of a Draw Request with respect to any portion of the Project Costs, an amount equal to the Project Costs as shown therein shall be paid directly to the person or entity entitled to payment as specified therein.

Section 3.04. Termination of Escrow Fund. On the earlier of December 21, 2012, the disbursement of all moneys in the Escrow Fund or the receipt by Escrow Agent of the Final Acceptance Certificate attached to Exhibit B executed by Borrower in physical or facsimile form, any moneys remaining in the Escrow Fund, less an amount equal to costs ·of the Improvements for which Escrow Agent has received a fully and properly completed Escrow Fund Draw Request in physical· or facsimile form and which has not been paid, shall be disbursed to Lender, without any notice from Lender or Borrower and despite any contrary notice from Borrower. The amount paid to Lender shall be applied by Lender first to interest accrued on the Loan and next to the principal installments of the Loan in the inverse order of maturity.

ARTICLE IV

MONEYS IN ESCROW FUND; INVESTMENT

Section 4.01. Control Agreement. The moneys and investments held by Escrow Agent under this Agreement are irrevocably held in trust for the benefit of Borrower, Authority and Lender, and such moneys, together with any income or interest earned thereon, shall be

4832-1140-8388.4 3

·,

~------~·--·----·------ --

expended only as provided in this Agreement. Borrower, Authority and Lender intend that Lender have a security interest in the Escrow Fund and such security interest is hereby granted to Lender by Borrower, to secure payment of all sums due to Lender, in its own capacity and as assignee of Authority under the Loan Agreement, as follows:

(a) Borrower hereby grants Lender, in its own capacity and as assignee of Authority, a security interest in all of Borrower's present and future rights, title and interest in, to and under the Escrow Fund consisting of account number A2139 (collectively, the "Securities Account"), and all Borrower's right to investment property contained therein, including without limitation all units, deposits, securities and securities entitlements, financial assets, instruments or other property contained in such securities account(s), and all other investment property, financial _assets, instruments or other property at any time held or maintained in such Securities Account, . together with all investment property, financial assets, instruments or other property at any time substituted therefor or for any part thereof, and all interest, dividends, increases, profits, new investment property, financial assets, instruments or other property and or other increments, distributions or rights of any kind received on account of any of the foregoing, and all other income received in connection therewith and all products or proceeds thereof (whether cash or non-cash proceeds) (collectively, the "Securities Entitlement"). Lender, Borrower and Escrow Agent agree to the provisions of this Section 4.01 to perfect Lender's security interest in the Securities Account.

(b) Until Escrow Agent is notified to the contrary by Lender in any entitlement order or other notice described in Section 4.01(c) below, Escrow Agent is authorized to act upon the instruction of Borrower, or its authorized representatives, and comply with Borrower's (or its authorized representatives) instructions for the purpose of making trades of any and all of the financial assets held in the Securities Account so long as said instructions are in accordance with Section 4.02 of this Agreement.

(c) From and after receipt of written notice to Escrow Agent from Lender of the occurrence and continuance of an Event of Default under the Loan Agreement giving the Lender right to exercise the remedies thereunder (the "Control Notice"), (i) Escrow Agent shall immediately cease complying with entitlement orders, instructions or directions concerning the Securities Account and the Securities Entitlement originated by the Borrower, or its representatives, and thereafter shall comply solely with the entitlement orders, instructions or directions of Lender concerning the Securities Account and/or the Securities Entitlements without further consent by Borrower; (ii) Escrow Agent is not authorized to release any of the Securities_ Entitlement or any proceeds thereof or make any distribution from the Securities Account to any party other than Lender, until otherwise instructed by Lender in writing; (iii) Escrow Agent is instructed to hold the Securities Account and Securities ·Entitlement for the benefit of Lender; and (iv) Lender is the only p~rson authorized to make any withdrawals of and/or to authorize or receive any distribution of orrelating to the Securities Entitlement.

(d) By its execution hereof, Escrow Agent acknowledges and agrees to the terms set forth herein, and that this Section 4.01 constitutes written notice to Escrow

4832-1140-8388.4 4

Agent and acknowledgment by Escrow Agerit of Lender's security interest m the Securities Account.

(e) Escrow Agent shall not agree with any third party that Escrow Agent will comply with any entitlement orders, instructions or directions concerning the Securities Account originated by the third party. Escrow Agent shall not permit Borrower to terminate the Securities Account.

{f) The rights and powers granted herein. to Lender have been granted in order to perfect its security interest in the Securities Account, are powers coupled with an interest and will neither be affected by the bankruptcy of the Borrower nor by the lapse of time. Escrow Agent's obligations under this Section 4.01 shall continue in effect until the security interest of Lender in the Securities Account has been terminated pursuant to the terms of the Loan Agreement.

Section 4.02. Investments Permitted. Moneys held by Escrow Agent in the Escrow Fund shall be invested and reinvested by Escrow Agent upon the written direction of Borrower only in Qualified Investments, as defined in Section 4.05. Such investments shall be registered in the name of Escrow Agent and held by Escrow Agent for the benefit of Lender, Authority and Borrower. With the approval of Borrower, Escrow Agent may purchase or sell to itself or any affiliate, as principal or agent, investments authorized by this Article. Such investments and reinvestments shall be made giving full consideration forthe time at which funds are required to be available. In the absence of any written direction from Borrower, Escrow Agent shall, to the extent reasonably practicable, invest moneys held hereunder in clause (f) of the definition of "Qualified Investments" so long as Lorna Linda University is the Escrow Agent, otherwise in clause (d) of the definition of "Qualified Investments."

Section 4.03. Investment Earnings. Escrow Agent shall, without further direction from Borrower, sell such investments as and when required to make any payment from the Escrow Fund. Any income received on the investment ofmoneys in the Escrow Fund shall be credited monthly to the Escrow· Fund. Borrower shall provide a properly completed Internal Revenue Service Form W-8/9 to Escrow Agent.

Section 4.04. Statements. Escrow Agent shall furnish to Borrower and Lender account statements accounting for all investments and interest and income therefrom and all deposits and disbursements from the Escrow Fund. Such accounting shall be furnished no less frequently than every month. Except for Escrow Agent's gross negligence or willful misconduct, none of Lender, Authority or Escrow Agent shall be responsible or liable for any loss suffered in connection with any investment of moneys made by Escrow Agent in accordance with this Article (other than Escrow Agent in its capacity as obligor under any Qualified Investment). In the event funds in the Escrow Fund are insufficient to pay the Project Costs of the Project, Borrower shall deposit additional funds into the Escrow Fund to be disbursed in accordance with the provisions hereof, and such additional funds deposited by Borrower shall be disbursed from the Escrow Fund before any other funds held in the Escrow Fund .. Escrow Agent may establish a sub-account on its records to account for and identify such funds deposited by Borrower.

4832-1140-8388.4 5

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1 Section 4.05. Qualified Investments. As used in this Agreement, the term "Qualified

Investments" means (a) securities which are general obligations of or are guaranteed as to the payment of principal and interest by the United States of America; (b) obligations, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following: Federal Home Loan Bank System, Government National Mortgage- Association, Farmers Home Administration, Federal Home Loan Mortgage Corporation or Federal Housing Administration; (c) commercial paper issued by corporations organized under the laws of a state of the United States which is rated in the highest rating category by Standard & Poor's Corporation or Moody's Investors Service, Inc.; (d) money market funds registered under the Investment Company Act of 1940 whose shares are registered under the Securities Act of 1933 and which have a rating of "AAAm-G," "AAAm" or "AAm" of Standard & Poor's Corporation, including any fund for which Escrow Agent or any of its affiliates provides management, investment, administrative or any other services; (e) certificates of deposit issued by or other forms of deposit in any national or state bank to the extent that such deposits are ·fully insured by the Federal Deposit Insurance Corporation or any successor agency which is backed by the full faith and credit of the United States or (f) so long as the Escrow Agent is Lorna Linda University, an interest in the Lorna Linda University Foundation Income Fund. Derivative products are not "Qualified Investments."

ARTICLEV

ESCROW AGENT'S AUTHORITY; INDEMNIFICATION

Section 5.01. Escrow Agent's Duties. Escrow Agent may act in reliance upon any writing or instrument or signature which it, in good faith, believes to be genuine, may assume the validity and accuracy of any statement or assertion contained in such a writing or instrument, and may assume that any person purporting to give any writing, notic:e, advice or instructions in connection with the provisions hereof has been duly authorized to do so. Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form, manner and execution, or validity of any instrument deposited with it, nor as to the identity, authority or right of any person executing the same; and its duties hereunder shall be limited to those specifically provided herein, and no implied duties or obligations shall be read into this Agreement against Escrow Agent.

Section 5.02. Indemnity. Unless Escrow Agent is guilty of gross negligence or willful misconduct with regard to its duties hereunder, Borrower hereby agrees to indemnify Escrow Agent and hold it harmless from any and all claims, liabilities, losses, actions, suits or proceedings at law or in equity, or any other expense, fees or charges of any character or nature, which it may incur ot with which it may be threatened by reason of its acting as Escrow Agent under this Agreement; and in connection therewith, to indemnify Escrow Agent against any and all expenses, including reasonable attorneys' fees and the· cost of defending any action, suit or proceeding or resisting any claim.

Se"ction 5.03. No Lien. Escrow Agent shall not have any lien on, right of offset against or other dght to any of the property deposited hereunder for any reason whatsoever including but not limited to those for indemnification, for reasonable attorneys' fees, court costs, for any suit, interpleader or otherwise, or for any other expenses, fees or charges of any character or nature,

4832-1140-8388.4 6

which may be incurred by Escrow Agent in connection with its duties hereunder or by reason of disputes arising among Borrower, Authority and Lender as to the correct interpretation of the Loan Agreement or this Agreement and instructions given to Escrow Agent hereunder, or otherwise, with the right of Escrow Agent, regardless of the instructions aforesaid, to hold the said property until and unless said additional expenses, fees and charges shall be fully paid.

Section 5.04. Interpretation. If Borrower, Authority or Lender shall be in disagreement about the interpretation of the Loan Agreement or this Agreement, or about the rights and obligations, or the propriety of any action contemplated by Escrow Agent hereunder, Escrow Agent may, but shall not be required to, file an appropriate civil action to resolve the disagreement. Escrow Agent shall be indemnified by Borrower for all costs, including reasonable attorneys' fees, in connection with such civil action, and shall be fully protected in suspending all or part of its activities under this Agreement until a final judgment in such action is received.

I

Section 5.05. Escrow Agent Liability. Escrow Agent may consult with counsel of its own choice and shall have full and complete authorization and protection with the opinion of such counsel. Escrow Agent shall otherwise not be liable for any mistakes of facts or errors of judgment, or for any acts or omissions of any kind unless (i) in the event of an error or omission in making disbursements from Proceeds hereunder, then Escrow Agent shall be liable for those caused by Escrow Agent's negligence or misconduct; and (ii) in the event of an error or omission in the performance of any other duties and obligations of Escrow Agent hereunder, then Escrow Agent shall be liable for those caused by Escrow Agent's gross negligence or willful misconduct.

ARTICLE VI

ESCROW AGENT'S COMPENSATION

Borrower hereby agrees to pay Escrow Agent a fee in accordance with the normal and customary arrangements between Borrower and Escrow Agent as compensation for the services to be rendered hereunder, and will pay and/or reimburse Escrow Agent upon request for all expenses, disbursements and advances, including reasonable attorneys' fees, incurred or made by it in connection with carrying out its duties hereunder.

ARTICLE VII

CHANGE OF ESCROW AGENT

Section 7.01. Substitution. A national banking association located in the United States or a state bank or trust company organized under the laws of a state of the United States, qualified as a depository of public funds, may be substituted to act as Escrow Agent under this Agreement upon agreement of the parties hereto. Such substitution shall not be deemed to affect the rights or obligations of the parties. Upon any such substitution, Escrow Agent agrees to assign to such substitute Escrow Agent its rights under this Agreement.

· ~ection 7.02. Resignation. Escrow Agent. or any successor may at any time resign by giving mailed notice to Borrower, Authority and Lender of its intention to resign and of the proposed date of resignation, which shall be a date not less than thirty (30) days after such notice

4832-1140-8388.4 7

is deposited in the United States mail with postage fully prepaid, unless an earlier resignation date and the appointment of a successor Escrow Agent shall have been or are approved by Borrower, Authority and Lender.

Section 7.03. Agent. Escrow Agent may, at Escrow Agent's cost, appoint an agent to exercise any of the powers, rights or remedies granted to Escrow Agent under this Agreement, and to hold title to property or to take any other action which may be desirable or necessary.

ARTICLE VIII

ADMINISTRATIVE PROVISIONS

Section 8.01. Books and Records. Escrow Agent shall keep complete and accurate records of all moneys received and disbursed under this Agreement, which shall be available for inspection by Borrower, Authority or Lender, or the agent of any of them, at any time during regular business hours upon reasonable prior notice.

Section 8.02. Notices. All notices, certificates, requests, demands and other communications provided for hereunder shall be in writing and shall be (a) personally delivered, (b) sent by first class United States mail, (c) sent by overnight courier of national reputation, or (d) transmitted by telecopy, in each case addressed to the party to whom notice is being given at its address as set forth below and, if telecopied, transmitted to that party at its telecopier number set forth above or, as to each party, at such other address or telecopier number as may hereafter be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section. All such notices, requests, demands and other communications shall be . deemed to have been given on (a) the date received if personally delivered, (b) three (3) days after being deposited in the mail if delivered by mail, (c) the next business day after the date sent if sent by overnight courier, or (d) the date of transmission if delivered by telecopy.

Section 8.03. Governing Law. This Agreement shall be construed and governed in accordance with the laws of the State of California.

Section 8.04. Severability. Any provisions of this Agreement found to be prohibited by law shall be ineffective only to the extent of such prohibition, and shall not invalidate the remainder of this Agreement or the Loan Agreement.

Section 8.05. Binding Agreement. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. Specifically, as used herein the term "Lender" means any person or entity to whom Lender has assigned its right to receive payments under the Loan Agreement in accordance with the requirements of the Loan Agreement and any payments due to Lender hereunder from after the date when a duplicate original of such assignment is filed with Escrow Agent.

Section 8.06. Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same Agreement.

4832-1140-8388.4 8

Section 8.07. Termination. This Agreement shall automatically terminate upon disbursement by Escrow Agent of all moneys held by it hereunder.

Section 8.08. Entire Agreement. This Agreement constitutes the entire agreement of the parties relating to the subject matter hereof.

Section 8.09. Amendment and Modification. To the extent permitted by law, the terms of this Agreement shall not be waived, altered, modified, supplemented or amended in any manD.er whatsoever except by written instrument signed by the parties hereto, and then such waiver, consent, modification or change shall be effective only in the specific instance and for the specific purpose given.

Authority, Lenqer, Borrower, and Escrow Agent hereby agree that Borrower, Escrow Agent and Lender may waive, alter, modify supplement or amend the provisions contained in Article II and III to this Agreement without the consent of Authority. Such amendment shall be effected by written instrument signed by Borrower, Escrow Agent and Lender, with written notice provided to Authority. Authority's agreement to the amendment referred to_ in this paragraph shall not be required.

Section 8.10. No Third Party Beneficiaries. This Agreement is made and entered into for the sole protection and benefit of the parties hereto and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents to which it is not a party.

[REMAINDER OF PAGE INTENTIONALLY BLANK; EXECUTION PAGE FOLLOWS.]

4832-1140-8388.4 9

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.

LOMA LINDA UNIVERSITY, Escrow Agent

By __________________________ __

Authorized Signatory

Address:

Authorized Signatory Christine M. Olenik

Vice President

11145 Anderson Street Suite BC-203 Lorna Linda, CA 92350 Attention: Robert W. Frost (909) 558-4534 Address: 3411 Silverside Road

Hanby Building, Suite 1 00 Attention: Dir. of Municipal Leasing Wilmington, DE 19810

Telephone: (704) 849-8016 Telecopier: (704) 849-8165

Telephone: Telecopier: (909) 558-4019

CALIFORNIA ENTERPRISE . LOMA LINDA UNIVERSITY MEDICAL DEVELOPMENT AUTHORITY, Authority CENTER, Borrower

By By ________________________ __

Wayne Schell, Chair Ruthita J. Fike

Attest -------------------------Gurbax Sahota, Assistant Secretary

Address.:

Telephone: Telecopier:

550 Bercut Drive, Suite G Sacramento, CA 95814 Attention: Executive Director (916) 448-8252, Ext. 1 02 (916) 448-3811

Chief Executive Officer

By __________________________ __

Steven L. Mohr Senior Vice President, Finance

Address:


11234 Anderson Street Lorna Linda, CA 923 54 Attention: Chief Executive Officer (909) 558-8135 (909) 558-7538

[SIGNATURE PAGE OF ESCROW AGREEMENT]

~--~----.


SIEMENS PUBLIC, INC., Lender LOMA LINDA UNIVERSITY, Escrow Agent

By _____________________________ By ________________________ __

Authorized Signatory Authorized Signatory

Address:

By __ ~--------------------------11145 Anderson Street Suite BC-203


Address: 3411 Silverside Road Hanby Building, Suite 1 00 Attention: Dir. of Municipal Leasing Wilmington, DE 19810


CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY, Authority

Address:


550 Bercut Drive, Suite G Sacramento, CA 95814 Attention: Executive Director (916) 448-8252, Ext. 102 (916) 448-3811


Lorna Linda, CA 92350 Attention: Robert W. Frost (909) 558-4534 (909) 558-4019

LOMA LINDA UNIVERSITYMEDICAL CENTER, Borrower

By ________________________ __

Ruthita J. Fike Chief Executive Officer

By __________________________ _


Address:


11234 Anderson Street Lorna Linda, CA 92354 Attention: Chief Executive Officer (909) 558-8135 (909) 558-7538



SIEMENS PUBLIC, INC., Lender LOMA LINDA UNIVERSITY, Escrow Agent

By------- By-+->'Q,.L:.....C~=---tJ__,... 1>~~...=....:._ __ Authorized Signatory Authorized Signatory

Address: By _______________ _

11145 Anderson Street Suite BC-203


Address: 3411 Silverside Road Hanby Building, Suite 100 Attention: Dir. of Municipal Leasing Wilmington, DE 19810


CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY, Authority

By ________________________ _

Wayne Schell, Chair

Attest ------------Gurbax Sahota, Assistant Secretary

Address:


550 Bercut Drive, Suite G Sacramento, CA 95814 Attention: Executive Director (916) 448-8252, Ext. 102 (916) 448-3811


Lorna Linda, CA 92350 Attention: Robert W. Frost (909) 558-4534 (909) 558-4019

LOMA LINDA UNIVERSITY MEDICAL CENTER, Borrower

By __ ~~~thFit~a~J.~FI~'ke~~~~~~~~---

By __ C_,J~ie~f-E_,_x_,~,...u-ti-ve-0--ffi-Ic-er_--___ _


Address:


11234 Anderson Street Lorna Linda, CA 92354 Attention: ChiefExecutive Officer (909) 558-8135 (909) 558-7538


I I •

EXHIBIT A

FORM OF ESCROW FUND DRAW REQUEST

[MUST BE SUBMITTED MORE THAN 5 BUSINESS DAYS PRIOR TO REQUESTED DISBURSEMENT]

Draw Request No. __ _

Lorna Linda University Medical Center (the "Borrower"), as Borrower under that certain Loan Agreement, dated as of December 1, 2009 (the "Loan Agreement"), by and among California Enterprise Development Authority ("Authority"), Siemens Public, Inc. ("Lender") and Borrower, hereby requests Lorna Linda University, as escrow agent ("Escrow Agent") under the Escrow Agreement, dated as of December 1, 2009 (the "Escrow Agreement") among Escrow Agent, Lender, Authority and Borrower, to make payment from the Escrow Fund (as defined in the Escrow Agreement) to the following party or parties, at the addresses set forth below: ·

Payee Address Amount To

Be Paid Description

In connection therewith, the untiersigned officer of Borrower hereby certifies as follows:

1. Prior Advances. All prior advances to Borrower have been applied to the payment of obligations of Borrower for materials, labor and other costs incurred in connection with the Improvements, and for no other purpose. ·

2. Disbursement of Proceeds of Requested Draw. Borrower will use the proceeds of the requested draw solely for the purpose of paying obligations owed by Borrower for labor, materials, and other costs incurred in connection with the Improvements as shown on this Draw Request, and for no other purpose.

. 3.

4832-1140-8388.4

Confirmation of Representations, Etc. As of the date hereof, the representations and warranties contained in the Loan Documents are true and correct in all material respects and no Event of Default and/or event which, with the lapse of time or giving of notice, or both, would constitute an Event of Default, exists. Borrower has fully and satisfactorily performed all of its covenants and obligations to date required under the Loan Documents.

C-1

4. Description of Improvements. Obligor hereby certifies that the description of the Improvements set forth in below is accurate. The Improvements described below have been delivered, constructed, installed and accepted. Such Improvements shall be located at the address set forth below:

Description Dollar Amount Address

5. Tax Regulatory Agreement. The undersigned has reviewed the provisions of the ax Regulatory Agreement, and the payment of this Draw Request from the Escrow Fund will not result in any proceeds of the obligation evidenced by the Loan Agreement being expended in violation of the provisions of the Tax Regulatory Agreement.

6. Reliance. This Draw Requesfis given for the purpose of inducing the Lender to disburse the requested advance. ·Borrower recognizes that Lender and Escrow Agent are relying upon this Draw Request and the accuracy of the attachments in making such advance.

The defined terms in this Draw Request shall have the same meanings as provided therefore in the Loan Agreement or the Escrow Agreement, as appropriate

4832-1140-8388.4

LOMA LINDA UNIVERSITY MEDICAL CENTER, Borrower

By ____________________________ __

Authorized Officer

Address: 11234 Anderson Street Lorna Linda, California 923 54 Attention: Chief Executive Officer


C-2

EXHIBITB

FINAL ACCEPTANCE CERTIFICATE

Escrow Agreement Dated as of December 1, 2009 Authority: California Enterprise Development Authority Lender: Siemens Public, Inc. Borrower: Lorna Linda University Medical Center Escrow Agent: Lorna Linda University

Dated: ._[ __ __,], 20[_]

Lorna Linda University 11145 Anderson Street, Suite BC-203 Lorna Linda, CA 92350 Attention: Robert W. Frost

Ladies and Gentlemen:

The undersigned hereby certifies that the Improvements in the attached Escrow Fund Draw Request, together with the other portions of the Improvements with respect to which funds were disbursed pursuant to the Escrow Agreement, constitutes all of the Improvements subject to that certain Loan Agreement dated as of December 1, 2009, by and among the Authority, the Lender and the Borrower. The Improvements subject to that Loan Agreement have been completed, inspected and accepted.

4832-1140-8388.4 C-1

LOMA LINDA UNIVERSITY MEDICAL CENTER

By ________________________ __ Title: _____________ _ Dme: ______________ _

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j

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4814-2985-5492.5

LOAN AGREEMENT

among

· CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY, as Authority

SIEMENS PUBLIC, INC., as Lender

and

LOMA LINDA UNIVERSITY MEDICAL CENTER, as Borrower

· Dated as of December 1, 2009

pbrubake

Text Box

2009-1425

r - ---

Section 1.01. Section 1.02. Section 1.03.

Section 2.01. Section 2.02. Section 2.03. Section 2.04. Section 2.05. Section 2.06. Section 2.07. Section 2.08. Section 2.09. Section 2.1 0. Section 2.11. · Section 2.12. Section 2.13.

Section 3.01.

TABLE OF CONTENTS

Page

ARTICLE I

DEFINITIONS AND EXHIBITS

Definitions ............................ ·· ............................................................................ 2 Exhibits ............................................................................................................ 14· Rules of Construction ..................................................................................... 15

ARTICLE II

FINANCING OF PROPERTY AND TERMS OF LOAN

Use of Loan Proceeds ..................................................................................... 15 Loan and Note ................................................................................................ 15 [Reserved] ............................................................... ~ ....................................... 16 Interest ............................................................................................................ 16 Payinents ......................................................................................................... 16 Payment on Non-Business Days ..................................................................... 17 Loan Payments To Be Unconditional.. ........................................................... 17 Maturity and Prepay1nents .............................................................................. 18 Special Obligations ............................................................................... · .......... 18 Additional Payments ....................................................................................... 18 Security ............................................................................................................ 19 Recording of Real Estate Instruments .................................... , ....................... 19 Escrow Fund ................................................................................................... 19

ARTICLE III

CONDITIONS PRECEDENT

Closing Conditions ..................................................................... ~ ................... 19

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS OF AUTHORITY ............... , ... 22

ARTICLE V

REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER .................... 24

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF LENDER ....... : ............................................. 30

4814-2985-5492.5

Section 7.01.

Section 7.02. Section 7.03. · Section 7.04.

Section 8.01. Section 8.02. Section 8.03. Section 8.04. Section 8.05. Section 8.06. Section 8.07. Section 8.08. Section 8.09. Section 8.1 0. Section 8.11. Section 8.12. Section 8.13. Section 8.14. Section 8.15. Section 8.16.

Section 8.17. Section 8.18. Section 8.19. Section 8.20. Section 8.21. Section 8.22. Section 8.23.

Section 9.01. Section 9.02. Section 9.03. Section 9.04. Section 9.05.

4814-2985-5492.5

ARTICLE VII

TITLE TO PROPERTY

Change in Name or Corporate Structure of Borrower; Change in Location ofBorrower's Principal Place ofBusiness ...................................... 32 Liens and Encumbrances to Title ................................................................... 32 Assignment of Insurance ................................................................................ 32 Authority Pledge of Loan Payments ............................................................... 33

ARTICLE VIII

AFFIRMATIVE COVENANTS OF BORROWER

Reporting Requirements ................................................................................. 33 Books and Records; Inspection and Examination .......................................... 35 Compliance With Laws; Envirorunental Indemnity ....................................... 35 Payment of Taxes and Other Claims .............................................................. 36 Maintenance of Property ................................................................................ 3 7 Insurance ......................................................................................................... 37

. Preservation of Existence ................................................................................ 40 Performance by Lender .................................................................................. 40 Limitations of Liability ............................................... : .................................. .41 Non-Liability of Authority ............................................................................. .41 Expenses ........... , ............................................................................................. 41 Punctual Payments ........................................................................................... 41 Financial Covenants ....................................................................................... 41 No Personal Liability ....................................................................................... 44 Indemnification ............................................................................................... 45 Covenant to Enter into Agreement or Contract to Provide Ongoing Disclosure ....................................................................................................... 45 Rates and Charges; Debt Coverage ........ : .. , ..... ; ........................ : ................... ..45 Tax Service Contract ...................................................................................... 46 Appraisals ....................................................................................................... 46 Brokers ............................................................................................................ 47 Compliance with Material Agreements .......................................................... 4 7 Property Contracts ............................................................................... ~ ........... 47 Liquidity ......................................................................................................... 47

ARTICLE IX

NEGATIVE COVENANTS OF BORROWER

Lien· ................................................................................................................. 48 Sale of Assets .................................................................................................. 48 Consolidation and Merger ............................................................................. .48 Accounting ............................................................................................ ~ ......... 49 Transfers ................................................... : ..................................................... 49

11

Section 9.06. Section 9.07. · Section 9.08. Section 9.09. Section 9.10. Section 9.11. Section 9.12. Section 9.13. Section 9.14. Section 9.15. Section 9.16. Section 9.17.

Repayment of Related Party Loans ................................................................ 49 Change of Corporate Member ............. '\' ....................................................... .49 Reserved ......................................................................................................... 49 Other Defaults ................................................................................................. 49 Use of Property ............................................................................................... 49 Tax Exempt Status .......................................................................................... 49 Maintenance of Business ................................................................................ 50-Prohibited Activities ....................................................................................... 50 Pledge of Assets .................. :····················· ...................................................... 50 Use of Funds ............................................................................. , ..................... 50 Additional Negative Covenants ...................................................................... 50 Lease or Sublease ofProperty ............. : .......................................................... 51

ARTICLE X

DAMAGE AND DESTRUCTION; USE OF NET PROCEEDS; CONDEMNATION

Section 10.01.

Section 1 0.02. ,Section 10.03.

Section 11.01. Section 11.02.

Section 12.01. Section 12.02. Section 12.03. Section 12.04. Section 12.05. Section 12.06.

Section 13.0 1. Section 13.02. Section 13.03. Section 13.04.

4814-2985-5492.5

Damage, Destruction and Condemnation of the Property; Application , ofNet Proceeds ............................................................................................... 51

· Assignment of Condemnation A ward and Title Insurance Proceeds ............. 55 Damage, Destruction and Condemnation ofthe Improvements; '/ Application ofNet Proceeds .............. : ............................................ ~ ............... 55

ARTICLE XI

ASSIGNMENT, SUBLEASING AND SELLING

Assignment by Len4er ........................................................................ ~ ........... S6 No Sale or Assignment by Borrower ............................................................... 56

ARTICLE XII

EVENTS OF DEFAULT AND REMEDIES

Events ofDefault ............................................................................................. 57 Remedies on Default .... · .................................... , ........ : ................................. : .. 58 Lender's Right to Perform the Obligations .................................................... 59 No Retnedy Exclusive ..... ; ................ _. .......... , ................................................... 60 Late Charge ............................................................................................. : ........ 60 General Conference and LLUAHSC Notice and Right to Cure ..................... 60

ARTICLE XIII

MISCELLANEOUS

Costs and Expenses of Lender and Authority ................................................ 60 Disclaimer of Warranties ................................................................................ 61 Notices ................................................................................. : .......................... 61 Further Assurance and Corrective Instruments ................................. ~ ............ 62

111

Section 13.05. Section 13.06. Section 13.07. Section 13.08. Section 13.09. Section 13.1 0. Section 13.11. Section 13.12. Section 13.13. Section 13.14.

EXHIBIT A EXHIBITB EXHIBITC EXHIBITD EXHIBITE EXHIBITF

EXHIBITG EXHIBITH EXHIBIT I

48 I 4-2985-5492.5

Binding Effect; Time ofthe Essence ............................................................... 62 Severability ....... _. ................................ _. ........................................................... , 62 Amendments ................................................................................................... 62 Execution in Counterparts ............................................................................... 62 Applicable Law ................................................................................................ 63 Captions .................................... _. ...................................................................... 63 Entire Agreement ............................................................................................ 63 Usury .............................................................................................................. 63 Waiver of Jury Trial ........................................................................................ 63 No Third Party Beneficiaries .......................................................................... 64

SCHEDULE OF PRINCIPAL PAYMENTS FORM OF OPINION OF COUNSEL TO BORROWER FORM OF INVESTOR'S LETTER OF REPRESENTATION LEGAL DESCRIPTION OF THE PROPERTY LIST OF PERMITTED ENCUMBRANCES FORM OF NONDISTURBANCE, SUBORDINATION AND ATTORNMENT AGREEMENT FORM OF BORROWER NOTE FORM OF AUTHORITY NOTE FORM OF TENANT ESTOPPEL CERTIFICATE

IV

Authority:

, Lender:

BoiTower:

LOAN AGREEMENT

California Enterprise Development Authority 550 Bercut Drive, Suite G Sacramento, California 95814 Attention: Executive. Director Telephone: (916) 448-8252, Ext. 102 Telecopier: (916) 448-3811

Siemens Public, Inc. 3411 Silverside Road Hanby Building, Suite 1 00 Wilmington, Delaware 19810 Attention: Director of Municipal Leasing Telephone: (704) 849-8016 Telecopier: (704) 849-8165

Lorna Linda University Medical Center 11234 Anderson Street Lorna Linda, California 92354 Attention: Senior Vice President, Finance Telephone: (909) 558-8135 Telecopier: (909) 558-7538

THIS LOAN AGREEMENT dated as of December 1, 2009 (this "Agreement") among Siemens Public, Inc., as lender (with its successors and assigns, "Lender"), California Enterprise Development Al).thority, a public entity duly organized and validly existing under the laws of the State of California (the "State"), as issuer ("Authority"), and Lorna Linda University Medical Center, as borrower ("BoiTower"):

WHEREAS, the Authority was established pursuant to the provisiOns of the Joint Powers Act, comprising Articles 1, 2, 3 and 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the Government Code of the State of California (the "Act") and a Joint Exercise of Powers Agreement, dated June 1, 2006 (the "Agreement"), among the cities of Eureka, Lancaster and Selma and other public agencies who have and may subsequently become associate members of the Authority;

WHEREAS, the Authority is authorized by the Agreement and the Act to issue bonds, notes or other evidences of indebtedness, or certificates of participation in leases or other agreements, or enter into loan agreements to, among other things, finance or refinance facilities owned and/or leased and operated by organizations described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code");

WHEREAS, pursuant to the provisions of the Act, the public agencies which are members of the Authority are authorized to jointly 'exercise any power common to such public agency members, including, without limitation, the power to acquire and dispose of property, both real and personal; and

48 I 4-2985-5492.5

WHEREAS, the County of San Bernardino is an associate member of the Authority and is authorized to acquire and dispose of property, both real mid personal, and

WHEREAS, pursuant to the provisions of the Act, the Authority may, at its option, issue bonds, rather than ce1iificates of participation, and enter into a loan agreement for the purposes of promoting economic development; and

WHEREAS, in furtherance of the purposes of the Act, Authority proposes to finance and refinance the Project (as hereinafter defined) by Borrower pursuant to this Agreement by obtaining a loan from Lender and lending the proceeds thereof to Borrower; and

WHEREAS, to secure the Authority Loan (as hereinafter defined), Authority will assign to Lender its right, title and interest in the Borrower Note (as hereinafter defined), including its right to receive Loan Payments (defined below)from Borrower; and ·

WHEREAS, Bon·ower proposes to borrow the proceeds of the loan made by Lender to Authority upon the terms and conditions set forth herein to finance and refinance the Project; and

WHEREAS, Borrower shall make Loan Payments (as hereinafter defined) directly to .· . .

Lender as assignee of Authority, pursuant to the terms set forth in this Agreement; and ,

WHEREAS, this Agreement and the Authority Note shall hot be deemed to constitute a . debt or liability or obligation of the State, any political subdivision thereof or any member of the . Authority, or a pledge of the faith and credit or taxing power of the State, any political . subdivision thereof or any member of the Authority, but shall be a special obligation of the Authority payable solely from the Loan Payments payable hereunder by Borrower to Lender as assignee of Authority;

NOW, THEREFORE, for good and valuable consideration, receipt of which is hereby acknowledged, and in consideration of the premises contained in this Agreement, Lender, Authority and Borrower agree as follows:

ARTICLE I

DEFINITIONS AND EXHIBITS

' Section 1.01. Definitions. . The following terms used herein will have the meanings

indicated below unless t~e context clearly requires otherwise:

'~Additional Payments" shall have the meaning ascribed thereto in Section 2.10 hereof.

"Affiliate" means with respect to Lender or an affiliate of Lender, any other Person that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, Lender or an affiliate of Lender. For purposes hereof, the term "control" means the possession, directly or indirectly, of the power to direct or cause direction ofthe management and policies of Lender or an affiliate of Lender, whether through the ownership of voting securities, partnership interests, membership interests, venture interests or other

4814-2985-5492.5 2

organizational interests, by contract, or otherwise; provided, however, in no event shall Authority be deemed an affiliate of Lender.

"Agreement" means this Agreement, including all exhibits hereto, as any of the same may be supplemented or amended from time to time in accordance with the terms hereof.

"Ambac Municipal Bond Insurance Policy" means the municipal bond insurance policy issued by the bond insurer in favor of the owners of the 1999 Bonds.

"Annual Debt Service Coverage Ratio" means for any Fiscal Year the ratio determined by dividing the Income Available for Debt Service for such Fiscal Year by the Debt Service Requirement for such Fiscal Year.

"Appraisal" means the appraisal conducted by a MAl certified appraiser chosen and engaged by Lender.

"Authority" means California Enterprise Development Authority, acting as issuer under this Agreement.

"Authority Loan" means the loan to Authority from Lender pursuant to the term~.hereof.

"Authority Loan Payments" means the loan payments payable by Authority to Lender under the Authority Loan pursuant to the provisions of this Agreement. As provided in Article II hereof, Authority Loan Payments shall be paid solely from Loan Payments to Lender (as assignee of Authority) under the Bon-ower Loan in the amounts and at the times set forth in Exhibit A hereto.

"Authority Note" means the promissory note of Authority issued to Lender in the form of Exhibit G hereto.

"Authorized Borrower Representative" means the President or Senior Vice President/Chief Financial Officer of Borrower or any other person designated in writing by either of them to Lender and Authority.

"Balloon Indebtedness" means Long-Term Indebtedness (or Short-Term Indebtedness intended to be refinanced upon or prior to its maturity so that such Short-Term Indebtedness and the Indebtedness intended to be used to refinance such Short-Term Indebtedness will be outstanding for a total of more than 365 days as ce1iified in an Officer's Certificate) 25% or more of the principal of which becomes due (either by maturity or mandatory redemption) during any period of 12 consecutive months, which portion of the principal is not required by. the documents governing such Indebtedness to be ammiized by redemption prior to such date.

"Bond Counsel" means any attorney at law experienced in matters pertaining to the exclusion of interest from gross income .for federal income tax purposes on bonds issued by states and political subdivisions, and duly admitted to practice law before the highest court of any state of the United States of America, approved by the Authority and Lender, but shall not include counsel for the Borrower.

4814-2985-5492.5 3

~ ------ - -

I

I

-t

_j

..i ! ., "Borrower" means the Lorna Linda University Medical Center, a California nonprofit

religious corporation, and its successors and assigns.

"Borrower Affiliate" means LLUAHSC and any other Person that directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, Borrower or an affiliate of Borrower. ·For purposes hereof, the term "control" means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of an entity, whether through the ownership of voting securities, partnership interests, membership interests, venture interests or other organizational interests, by contract, or otherwise; provided, however, in no event shall Authority be deemed an affiliate of Borrower.

"Borrower Financial Statements" shall have the meaning ascribed to such term m Section 8.01 hereof.

"Borrower Note" means the Note, dated December 22, 2009, executed by the Borrower in the form attached as Exhibit G hereto and in the principal amount of $8,500,000 evidencing the obligation of the Borrower to make Loan Payments.

"Business Day" means a day other than a Saturday or Sunday on which Lender is . generally open for business in Los Angeles, California.

"Cash" means the sum of cash, cash equivalents, liquid investments and unrestricted . marketable securities of Borrower, including funds designated by the governing body of Guarantor which would qualify as cash or cash equivalents but for the board designation, less (i) restricted funds and funds subject to any lien or pledge, (ii) self-insurance reserves, (iii) proceeds of any short..:term borrowing, including, without limitation, draws on lines of credit regardless of the maturity date of the line of credit agreement and bank overdrafts, and (iv) Current Liability Overages, but only if such number is positive.

"Closing Date" means December 22, 2009.

"Code" means the Internal Revenue Code of 1986, as amended, and United States Treasury regulations promulgated thereunder.

"Completion Indebtedness" means any Long-Term Indebtedness incurred by Borrower for the purpose of financing the completion of constructing or equipping facilities for which Long-Term Indebtedness or Balloon Indebtedness had previously been incurred and which Borrower in good faith expected to be sufficient to complete such facilities, to the extent necessary to provide a completed and equipped facility of the type and scope contemplated at the time and in accordance with the general plans and specifications for such facility as originally prepared with only such changes as have been made in conformance with the documents pursuant to which such Long-Term Indebtedness or Balloon Indebtedness was originally incurred or as otherwise required by law or a governmental entity responsible for permitting such facility.

"Constituent Party" means, each and every entity (but excluding a natural person) that is required to consent or authorize the execution of a Loan Document by Borrower, any Constituent Party, or any other party to a Loan Document, as applicable, to the extent such party is a

4814-2985-5492.5 4

-;::-- ----- -·

~--~--·-------·-----------

corporation, limited li.~bility company, general or limited partnership, joint venture, trust (statutory or otherwise), or any other fcirm of organization.

"Current Liability Overages" means Day of Cash Expenditure multiplied by the number derived from (a) the subtraction of Liability Days from (b) Current Liabilities divided by Day of Cash Expel)ditures. For purposes of this definition only, "Current Liabilities" shall mean current liabilities less the current maturities of long-term indebtedness, all as determined in accordance with generally accepted accounting principles.

"Day of Cash Expenditure" means the amount computed by subtracting from the amount of Total Operating Expenses the amount of depreciation expense included in Total Operating Expenses, and dividing the result by 365. ·

"Debt Service Coverage Ratio" means, for any period of time, the ratio determined by dividing the Income Available for Debt Service for· such period by the Maximum Annual Debt Service.

"Debt Service Requirement" means, for any period of time for which such determination is made, the scheduled payments to be made with respect to principal (or mandatory sinking fund or installment purchase price or lease rental or similar payments) and interest on outstanding Long-Term Indebtedness of Borrower during such period taking into account at the.}option of Borrower:

(a) Long-term Indebtedness shall include 20% (except as otherwise provided below) of ·Indebtedness represented by a Guaranty of obligations, increasing to 100% if Borrower has made a payment pursuant to such Guaranty during the fiscal year that ended prior to the date for which the Debt Service Requirement is being determined.

(b) With respect to Balloon Indebtedness, the amount of principal and interest deemed payable during such period shall be determined as if such Balloon Indebtedness were being repaid in substantially equal annual installments of principal and interest over a term over which Borrower could reasonably be expected to borrow, not to exceed twenty-five (25) years from the date of incurrence of such Balloon Indebtedness, and bearing interest at an interest rate (determined as of the date of calculation of the Debt Service Requirement) equal to the rate at which Borrower could reasonably be expected to borrow for such term, not to exceed twenty-five (25) years, by issuing Indebtedness, all as set forth in an Officer's Certificate accompanied by a letter of a banking or investment banking institution knowledgeable in matters of health care finance, confirming that the borrowing term and interest rate assumptions set forth in such statement are consistent with the assumptions set forth in this subsection.

(c) With respect to Variable Rate Indebtedness, if. the actual interest rate on such Variable Rate Indebtedness cannot be determined for the period for which the Debt Service Requirement is being calculated, the amount of interest deemed payable during such period on such Variable Rate Indebtedness shall be assumed to be equal to the average interest rate per annum which was in effect (or, if such Variable Rate Indebtedness was not outstanding during such eighteen month period, which would have

4814-2985-5492.5 5

been in effect) for any twelve (12) consecutive calendar months specified in an Officer's Certificate during the eighteen (18) calendar months immediately preceding the date of calculation ofthe Debt Service Requirement. ·

(d) With respect to Indebtedness payable from ari Irrevocable Deposit, the amount. of principal or interest taken into account during such period shall be. a~sumed to equal only the principal or interest not payable from such Irrevocabie Deposit and the

·investment income from such funds.

(e) With respect to Long-Term Indebtedness incurred to finance or refinance the construction of capital improvements, principal and interest with respect to such Long-Term Indebtedness shall be excluded from the determination of the Debt Service Requirement but only in proportion to the amount of principal and interest on such LongTerm Indebtedness which is payable in the then current Fiscal Year from the proceeds of such Long-Term Indebtedness.

·(f) With respect to Long-Term Indebtedness with respect to which a Financial Products Agreement has been entered into by Guarantor, interest on such Long-Term Indebtedness shall be included in the determination of the Debt Service Requirement by including for each Fiscal Year an amount equal to the amount of interest payabl~. on such Long-Term Indebtedness in such Fiscal Year at the rate or rates stated in such Long-Term Indebtedness plus any Financial Agreement Payments payable in such Fiscal Year minus any Financial Agreement Receipts receivable in such Fiscal Year; provided that in no event shall any calculation made pursuant to this clause result in a number less than ·zero being included in the determination of the Debt Service Requirement and provided, fmiher, if the actual interest rate on such Long-Term Indebtedness or the actual amount of Financial Agreement Payments or Financial Agreement Receipts cannot be determined for the period for which the Dept Service Requirement is being calculated, the amount of interest deemed payable during such period on such Long-Term Indebtedness shall be

·determined by applying the average interest rate per annum which was in effect (or, if such Long-Term Indebtedness was not outstanding during such eighteen month period, which would have been in effect) or the average Financial Agreement Payments which . would have been paid, or the average Financial Agreement Receipts which would have been received, as the case may be, for any 'twelve (12) consecutive calendar months specified in an Officer's Ce1iificate during the eighteen ( 18) calendar months immediately preceding the date of calculation of the Debt Service Requirement.

"Deed of Trust" means the Deed of Trust with Assigmnent of Rents, Security Agreement and Financing Statement, dated as of the date hereof, executed and recorded by Borrower in favor of Authority, relating to the Property.

"Deed of Trust Assignment Agreement" means the Deed of Trust Assigmnent Agreement, dated as of the date hereof, executed by Authority and Lender, and recorded in the Official Records of San Bernardino County~ · ·

"Default" means an event that, with giving of notice or passage of time or both, would constitute an Event of Default as provided in Article XII hereof.

4814-2985-5492.5 6

"Default Rate" means the Interest Rate plus 5% per annum.

"Determination of Taxability" means any determination, decision or decree by the Commissioner of Internal Revenue, or any District Director of Internal Revenue, any court of competent jurisdiction, or a legal opinion obtained by Lender from independent counsel nationally recognized in tax-exempt finance matters and reasonably acceptable to Borrower and Authority to the effect that an Event of Taxability shall have occurred. A Determination of Taxability also shall be deemed to have occurred on the first to occur of the following:

(a) the date when Borrower files any statement, supplemental statement, or other tax schedule, return or document, which discloses that an Event of Taxability shall have occurred; ·

(b) the effective date of any federal legislation enacted after the date of this Agreement or promulgation of any income tax regulation or ruling by the Internal Revenue Service that causes an Event of Taxability after the date of this Agreement; or

(c) a sale or other deliberate action within the meaning of Treas. Reg. § 1.141-2(d), occurs with respect to all or a portion of the Project (as defined in the Tax Regulatory Agreement) without Borrower furnishing Lender with an opinion of independent counsel nationally recognized in tax-exempt finance matters and re,asonably acceptable to Lender and Authority to the effect that such change in use (and accompanying remedial action, if any) will not cause interest on the Authority Note to become'includable in the gross income of the recipient.

"Draw Request" means, with respect to the Improvements, a Draw Request in substantially the same form set forth as Exhibit B to the Escrow Agreement, which has been executed by Borrower.

"Environmental Laws" means any federal, state or local law (whether imposed by statute, or administrative or judicial order, or common law), now or hereafter enacted, governing health, safety, industrial hygiene, the environment or natural resources, or Hazardous Materials, including, such laws governing or regulating the use, generation, storage, removal, recovery, treatment, handling, transport, disposal, control, discharge of, or exposure to, Hazardous Materials.

"Environmental Report" means that ce1iain environmental site assessment dated November 23, 2009, prepared by Converse Consultants.

"Escrow Agent" means the Lorna Linda University, as escrow agent under the Escrow Agreement, and its successors and assigns permitted pursuant to the terms of an Escrow Agreement.

"Escrow· Agreement" means an Escrow Agreement dated December 1, 2009 among Lender, Obligor and Escrow Agent relating to the disbursement of Loan Proceeds.

"Escrow Fund'' means the funds established and held by Escrow Agent pursuant to the Escrow Agreement.

48 I 4-2985~5492.5 j

7

"Event of Taxability" means, with respect to any Authority Note: (i) the application of the proceeds of such Authority Note in such manner that such Authority Note becomes an "arbitrage bond" within the meaning of Code Sections 1 03(b )(2) and 148, and with the result that interest on such Authority Note is or becomes includable in a holder's gross income (as defined in Code Section 61); (ii) if as the result of any act, failure to act or use of the proceeds of such Authority Note or any misrepresentation or inaccuracy in any of the representations, warranties or covenants contained in this Agreement by Authority or Borrower or the enactment of any federal legislation or the promulgation of any federal rule or regulation after the date of this Agreement, the interest on such Authority Note is or becomes includable in a holder's gross income (as defined in Code Section 61) or (iii) any revocation of the determination letter from the Internal Revenue Service regarding status of Borrower as a 501 ( c )(3) corporation.

"Financial Agreement Payments" means payments periodically required to be paid to a counterparty by the Borrower pursuant to a Financial Products Agreement.

"Financial Agreement Receipts" means amounts periodically required to be paid to the Borrower by a counterparty pursuant to a Financial Products Agreement.

"Financial Products Agreement" means an interest rate swap, cap, collar, option, floor, forward or other hedging agreement, arrangement or security, however denominated, i .. dentified to the Lender in an Officer's Certificate as having been entered into by Borrower with a Qualified Provider not for investment purposes but with respect to Indebtedness (which Indebtedness shall be specifically identified in the Officer's Certificate) for the purpose of (1) reducing or otherwise managing the Borrower's risk of interest rate changes or (2) effectively

. converting the Borrower's interest rate exposure, in whole or in part, from a fixed rate exposure ·to a variable rate exposure, or from a variable rate exposure to a fixed rate exposure.

"Fiscal Year" initially means the twelve month period commencing on January 1 and ending on December 31 in each year.

"GAAP" means generally accepted accounting principles.

"General Conference" means the General Conference of Seventh-day Adventists.

"Governmental Authority" means, any and all courts, boards, agencies, commissions, offices, or authorities of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise), and any and all municipal services providers, whether now or hereafter in existence. ·

"Governmental Requirements" means, all constitutions, statutes, laws, ordinances, rules, regulations, orders, writs, injunctions or decrees of any Governmental Authority applicable to Borrower and/or the Project, as applicable.

"Gross-Up Rate" means; with respect to any Interest payment (including payments made prior to the Event of Taxability), the rate necessary to calculate an additional payment in an amount sufficient such that the sum of the Interest payment plus the additional payments would, after being reduced by the federal income tax (including interest and penalties, but not including

4814-2985-5492.5 8

r -

I ~. the effect of alternative minimum tax, environmental tax or other similar tax effect) actually

imposed and paid or to be paid by Lender thereon, equal the amount of the Interest payment.

"Guaranty" means, one or more guaranty agreements now or hereafter in effect executed by Borrower guaranteeing, in whole or in part, the repayment of Indebtedness, and any and all renewals, modifications, restatements, replacements or supplements thereof.

"Hazardous Materials" means (a) petroleum or chemical products, whether in liquid, solid, or gaseous form, or any fraction or by-product thereof, (b) asbestos or asbestos-containing materials, (c) polychlorinated biphenyls (pcbs), (d) radon gas, (e) underground storage tanks, (f) any explosive or radioactive substances, (g) lead or lead-based paint or (h) any other substan.ce, material, waste or mixture which is or shall be listed, defined, or otherwise determined by any Governmental Authority to be hazardous, toxic, dangerous or otherwise regulated, controlled or giving rise to liability under any Environmental Laws.

\

"Improvements" mean the capital improvements to be financed from time to time with proceeds of the Loan and acquired, constructed or installed on Borrower's. facilities located at 11234 Anderson Street, 25333 Barton Road, 25455 Barton Road, 11406 Lorna Linda Drive, 11370 Anderson Street, and 11375 Anderson Street, Lorna Linda, California, 26780 Barton. Road, 1686 Barton Road, 1690 Barton Road, and 1710 Barton Road, Redlands, Califqrnia and · 900 East Washington Street, Colton, California, as more specifically identified in ,the Draw Requests under the Escrow Agreement and are incorporated herein and made a part hereof.

"Income Available for Debt Seniice" means; unless the context provides otherwise, with respect to the Borrower as to any period of time, its combined excess of revenues over expenses (excluding income from all Irrevocable Deposits), before depreciation, amortization, and interest expense, as determined in accordance with generally accepted accounting principles; provided, that no determination thereof shall take into account:

(a) any gain or loss resulting from either the early· extinguishment or refin~cing of Indebtedness or the sale, exchange or other disposition of capital assets not made in the ordinary course of business;

(b) gifts, grants, bequests, donations or contributions, and income therefrom, to the extent specifically permanently restricted by the donor or by law to a particular purpose inconsistent with their use for the payment of principal of, redemption premium and interest on Indebtedness or the payment of operating expenses;

(c) the net proceeds of insurance (other than business interruption insurance) and condemnation awards;

(d) adjustments to the value of assets or liabilities resulting from changes in generally accepted accounting principles;

(e) umealized gains or losses that do not result in the receipt or expenditure of cash; and

4814-2985-5492.5 9

r-

(f) nonrecurring items which do not involve the receipt, expenditure or transfer of assets.

"Indebtedness" means all obligations for borrowed money, installment sales and capitalized lease obligations, incurred or assumed by Borrower, including Guaranties, LongTerm Indebtedness, Short-Term Indebtedness or any other obligation for payments of principal and interest with respect to money borrowed.

"Independent Consultant" means .a Person which (1) is in fact independent, (2) does not have any material direct or indirect financial interest in Borrower or any Affiliate of Borrower and (3) is not connected with Borrower or any Affiliate of Borrower as an officer, employee, trustee, partner, director or person performing similar functions, and designated by Borrower, qualified to pass upon questions relating to the financial affairs of facilities of the type or types operated ·by Borrower and determined by Borrower to have a favorable reputation for skill and experience in the financial affairs of such facilities.

"Industry Restrictions" means federal, state or other applicable governmental laws or regulations or general industry standards or conditions placing restrictions and limitations on the rates, fees and charges to be fixed, .charged and collected by the Borrower.

"Interest" means the portion of any payment from Authority to Lender designated as and comprising interest as provided in Section 2.04 hereof.

"Interest Rate" means 4.500% per annum.

"Irrevocable Deposit" means the irrevocable deposit in trust of cash in an amount (or governmen~ obligations the principal of and interest on which will be in an amount), and under terms sufficient to pay all or a portion of the principal of and/or premium, if any, and interest on, as the same shall become due, of any Indebtedness which would otherwise be considered outstanding. The trustee of such deposit may be any trustee or escrow agent authorized to act in such capacity.

"Leases" shall have the meaning ascribed thereto in the Deed of Trust.

"Legal Requirements" means, all of the following: (i) any and all covenants, conditions, and restrictions contained in any deeds, other forms of conveyance, or in any other instruments of any nature that relate in any way or are applicable to the Property or the ownership, use, or occupancy thereof, (ii) Borrower's presently or subsequently effective organizational documents creating or governing such party or which authorize such party's participation in the subject transaction, (iii) any and all Leases, (iv) any· and all Property Contracts, (v) any and all ground leases and other leases,. other than Leases, pursuant to which Borrower is granted a possessory interest in and to the land and/or the improvements and (vi) any applicable laws, rules, regulations, permits, licenses or approvals and any restrictions relating to the Property.

"Lender" means (a) Siemens Public, Inc., acting as lender under this Agreement, (b) any surviving, resulting or transferee corporation of Siemens Public, Inc. and (c) except where the context requires otherwise, any assignee(s) of Lender.

4814-2985-5492.5 10

-----~---~----~--- ~-·-·------------

"Liability Days" means, for purposes of calculating Current Liability Overages, seventy (70) for the calculation to be performed on each calculation date.

"Liens" has the meaning assigned to such term in Section 7.02.

"LLUAHSC" means Lorna Linda University Adventist Health Sciences Center, a California nonprofit religious corporation.

"Loan" means the loan frorri Authority to Borrower pursuant to this Agreement.

"Loan Documents" means this Agreement, the Notes, the Escrow Agreement, the Tax Regulatory Agreement, the Deed of Trust and the Deed of Trust Assignment Agreement.

"Loan Payments" means the loan payments payable by Borrower pursuant to the provisions of this Agreement and the Borrower Note, including specifically the principal payments set forth in Exhibit A hereto and interest on the Loan as determined pursuant to Section 2.04 hereof, together· with any Additional Payments. As provided in Article II hereof, Loan Paymen,ts shall be payable by Borrower directly to Lender, as assignee of Authority and holder.of the Borrower Note, in the amounts and at the times as set forth in Exhibit A hereto with respect to princip~l and Section 2.04 hereof with respect to interest.

"Loan Proceeds" means the total amount of money to be deposited· by Lender in the · Escrow Fund for application in accordance with the terms hereof and thereof.

"Long-Term Indebtedness" shall mean Indebtedness having an original maturity greater than one year or renewable at the option of Borrower for a period greater than one year from the date of original incurrence or issuance thereof unless, by the terms of such Indebtedness, no Indebtedness is permitted to be outstanding thereunder for a period of at least thirty (30) consecutive days during each calendar year.

"Management Agreement" means any agreement between Borrower and another entity or person for the- management, operation, repair or leasing of any portion of the Property or Improvements. ·

'~Master Indenture" means the Master Indenture of Trust, dated as of October 1, 2005, between the Borrower and U.S. Bank National Association, as supplemented and amended.

"Material Adverse Effect" means any event, circumstance, fact, condition, development, or occurrence that has had or could be expected to have a material and adverse effect on (i) the business, condition (financial or . otherwise), operations, . prospects, liabilities, results of operations, capitalization, liquidity, or any other assets of Borrower or of any. subsidiary of Borrower, taken as a whole; (ii) the ability of Borrower to pay any sums due hereunder and perform any of its obligations hereunder in strict accordance with the terms of this Agreement; or (iii) the validity, enforceability, or binding effect of this Agreement or any of the Loan Documents.

"Maximum Annual Debt Service" shall mean the highest Debt Service Requirement for the current or any succeeding Fiscal Year.

4814-2985-5492.5 11

"Maximum Rate'' shall mean 12% per annum.

"Net Proceeds" means the amount remaining from the gross proceeds of any insurance claim or condemnation award received in respect of the Property after deducting all expenses (including reasonable attorneys' fees and costs). inyurred in the c91lection of such claim or award.

"Nonrecourse Indebtedness" means any Indebtedness secured by a Lien on property of the Borrower, liability for which is effectively limited to the property subject to the Lien with no recourse, directly or indirectly (whether through credit enhancement of such Indebtedness or otherwise), to any other property of the Borrower.

"Notes" means, collectively, the Authority Note and the Borrower Note.

"Officer's Certificate" shall mean a certificate signed by the Authorized Borrower Representative.

"Permitted Encumbrances" means the permitted encumbrances listed in Exhibit E hereto.

"Person" means any corporation, limited liability company, general partnership; limited. partnership, limited liability partnership, firm, association, joint venture, trust and any otherorganization or legal entity, including any public or governmental body, agency or instrumentality, as well as any natural person.

"Prepayment Amount" means the amount which Borrower may or must from time to time pay or cause to be paid to Lender as assignee of Authority and holder of the Borrower Note, as provided in Section 2.08 hereof and in the Borrower Note which shall be equal to the unpaid principal of the Loan, together with accrued interest and all other atnounts due hereunder, together with a premium for the privilege of prepayment equal to two percent (2%) of the principal amount prepaid.

"Principal" means the portion of any Loan Payments designated as principal in Exhibit A hereto.

"Project" means the financing and refinancing of the (1) the acquisition of the Property and (2) the acquisition, construction, installation and equipping of the Improvements.

I

"Project Costs" means costs to be paid out of the proceeds of the Loan with respect to the· Project; including the total of all reasonable or necessary expenses incidental to Project including without limitation: the expenses of studies and surveys, title policies, architectural and engineering services, legal costs, and the acquisition of equipment and furnishings constituting a part of the Project and all other necessary and incidental expenses related to the Project.

"Property" means the real property described in Exhibit D hereto, together with any greater estate therein as hereafter may be acquired by Borrower and all buildings, structures, other improvements and fixtures now situated, placed or constructed on the Property.

"Property Contracts" means any Contract (as such term is defined in the Deed of Trust) related to or which affects all or any portion of the operation, or use of any portion of the

. 4814-2985-5492.5 12

Property, including all Management Agreements, all service contracts, and all utility, maintenance and security contracts, but excluding Leases.

"Qualified Institutional Buyer" shall have the meaning ascribed thereto in Rule 144A of the Securities Act of 1933, as amended.

"Qualified Provider" shall mean any financial institution or insurance company which is a party to a Financial Products Agreement if the unsecured long-term debt obligations of such financial institution or insurance company (or of the parent or a subsidiary of such financial ins~itution or insurance company if such parent or subsidiary guarantees the performance of such financial institution or insurance company under such Financial Products Agreement), or obligations secured or supported by a letter of credit, contract, guarantee, agreement, insurance policy or surety bond issued by such financial institution or insurance company (or such guarantor parent or subsidiary), are rated in one of the three highest Rating Categories of a national rating agency at the time of the execution and delivery of the Financial Products Agreement.

"Rating Category" shall mean (i) with respect to any long-term rating category, all ratings designated by a particular letter or combination of letters, without regard to any, numerical modifier, plus or minus sign or other modifier and (ii) with respect to any sport-term · or commercial paper rating category, all ratings designated by a particular letter or combination of letters and taking ii1to account any numerical modifier, but not any plus or minus sign or other modifier.

"Remedial Work" shall have the meaning set forth in the Deed ofTrust.

"Rule" has the meaning assigned to such term in Section 8.16.

"Short-Term Indebtedness" means all Indebtedness having an original maturityJ~ss than or equal to one year and not renewable at the option of Borrower for a term greater than one year from the date of original incurrence or issuance, of if renewable for a term greater than one year, such Indebtedness is not permitted to be outstanding thereunder for a period of at least thirty (30) consecutive days during each Fiscal Year.

"Site Assessment" means an environmental engineering report for the Property prepared by an engineer engaged by Lender at Borrower's expense, and in a manner satisfactory to Lender, based upon an investigation relating to and making appropriate inquiries concerning the existence of Hazardous Materials on or about the Property, and the past or present discharge, disposal, release or escape of any such substances, all consistent with good customary and commercial practice.

/

"State" means the State of California.

"Subordination Agreements" means one or more subordination, nondisturbance and attornment agreements entered into by and among Borrower, Lender and certain of the tenants of the Propetiy, in the form attached hereto as Exhibit For such other form acceptable to Lender.

4814-2985-5492.5 13

I -

"Tax Regulatory Agreement" means the Tax Regulatory Agreement dated the Closing Date between Borrower and Authority, as such Tax Regulatory Agreement may be amended from time to time in accordance with its terms.

"Tenant Estoppel Certificate" means one or more Tenant Estoppel Certificates executed by certain of the tenants of the Property, in the form attached hereto as Exhibit I or such other form acceptable to Lender.

"Total Operating Expenses" means, for a particular Fiscal Year, Borrower's "total expenses" (excluding extraordinary gains and losses), as reflected on Borrower's audited financial statements for the most recent Fiscal Year.

"Total Revenues" means the combined operating and nonoperating revenues of the Borrower for any Fiscal Year, all as determined in accordance with generally accepted accounting principles.

"UCC" means the Uniform Commercial Code as adopted and in effect in the State.

"Variable Rate Indebtedness" means Indebtedness the interest on which is payable. pursuant to a variable interest rate. formula or other determination method rather than at a fixed rate of interest per annum to maturity.

"1999 Bonds" means the City of Lorna Linda Hospital Revenue Refunding Bonds (Lorna Linda University Medical Center), Series 1999-:A.

Section 1.02. Exhibits. The following exhibits are attached hereto and made a part hereof:

Exhibit A: respect to the Loan

Exhibit B:

Exhibit C:

Exhibit D:

Exhibit E:

Exhibit F:

Exhibit G:

Exhibit H:

Exhibit I:

4814-2985-5492.5

Schedule of Prin~ipal Payments setting forth the principal payments with

Form of opinion of counsel to Borrower

Form of Investor's Letter of Representation

Legal Description of Property

List of Permitted Encumbrances

Form ofNondisturbance, Subordination and Attornment Agreement

Form of Borrower Note

Form of Authority Note

Form of Tenant Estoppel Certificate

14

Section 1.03. Rules of Construction.

(a) The singular form of any word used herein, including the terms defined in Section 1.01 hereof, shall include the plural, and vice versa. The use herein of a word of any gender shall include correlative words of all genders. .

(b) Unless otherwise specified, references to Articles, Sections and other subdivisions of this Agreement are to the designated Articles, Sections and other subdivision of this Agreement. The words "hereof," "herein," "hereunder" and words of similar import refer to this Agreement as a whole.

(c) The headings or titles of the several a1iicles and sections shall be solely for · convenience of reference and shall not affect the meaning, construction or effect of the

provisions hereof.

ARTICLE II

FINANCING OF PROPERTY AND TERMS OF LOAN

Section 2.01. Use of Loan Proceeds. The proceeds of the Loan shall be used.solely to· finance and refinance the Project, and for other related costs and expenses in accordfince with this Agreement. Borrower covenants and agrees to pay or cause to be paid such amounts as·may be necessary to finance or refinance the Project. The Borrower covenants and agrees that all Loan Proceeds and the earnings thereon shall be expended on the Project.

Section 2.02. Loan and Note.

(a) Lender hereby agrees, subject to the terms and conc1itions of this Agreement, to make the Authority Loan to Authority in the amount set forth in the Authority Note; Authority hereby agrees, subject to the terms and conditions of this Agreement, to borrow such amount from Lender and to lend the Loan Proce'eds to Borrower and to issue to Lender the Authority Note; and Borrower hereby agrees to borrow such amount from Authority to finance and refinance the Project and to issue to Authority the Borrower Note. The Borrower Note shall be executed and delivered by the Borrower concurrently with the execution and delivery of this Agreement.

(b) Upon fulfillment of the conditions set forth in Article III her:eof, Lender shall disburse the Loan Proceeds in the amount of $8,500,000 to Authority by transferring such Loan Proceeds as follows:

4814-2985-5492.5

(i) $5,324,588.72 of such proceeds shall be transferred to the Escrow Agent for deposit into the Escrow Fund. The Lender shall wire transfer such Loan Proceeds pursuant to the following wire instructions:

BANK OF AMERICA NT & SA RIVERSIDE CA ABA NO: 026009593 FBO: LOMA LINDA UNIVERSITY

15

.., '

-1

! .., .,

!

ACCOUNT NO: 1496 4 50584 REFERENCE: A2139 Siemens LLUMC 2009 Escrow Fund

(ii) $3,175,411.29 of such proceeds shall be transferred to the First American Title Company to apply to pay off the existing loan on the Property. The Lender shall wire transfer such Loan Proceeds pursuant to the following wire instructions:

First American Trust, FSB 5 First American Way Santa Ana, California 92707 ABA# 122241255 Account Name: First American Title Insurance Company Account# 3016020000 Reference: EscrowNo. NCS-415467-0NT1

Attn: Janette Delap Customer Name: Pro Plaza!LLUMC

(c) Authority's special, limited obligation to repay the Authority Loan and. Authority Note, and Borrower's obligation to repay the Loan and the Borrower Note, shall commence, and interest shall begin to accrue, on the date that Loan Proceeds are deposited into the Escrow Fund.

Section 2.03. [Reserved].

Section 2.04. Interest.

(a) The principal amount of the Authority Note and the Loan hereunder outstanding from time to time shall bear interest (computed on the basis of actual .days elapsed in a 360-day year) at the Interest Rate. Interest accruing on the principalbalance of the Authority Note and the Borrower Note shall be payable on the dates and in the amounts set fmih in Exhibit A and upon earlier demand in accordance with the. terms hereof or prepayment in accordance with Section 2.08 hereof and the Authority Note and the Borrower Note.

(b) Upon the OGcurrence of a Determination of Taxability, Borrower shall, with respect to future interest payments, begin making Loan Payments calculated at the Gross-Up Rate. In addition, immediately upon demand of Lender, Borrowershall make a payment to Lender sufficient to supplement prior Loan Payments to the Gross-Up Rate, if and to the extent the interest component of prior Loan Payments has been determined to be taxable income in accordance with this Agreement.

Section 2.05. Payments. Authority shall pay the principal of, premium, if any, in accordance with this Section and Section 2.08 hereof, and interest on the Authority Note, but only out of the Loan Payments to be made by Borrower to Authority under the Loan pursuant to this Agreement and the Borrower Note. Borrower shall pay to Lender, as assignee of Authority, Loan Payments, in the amounts and on the dates set forth in Exhibit A hereto with respect to the

r

4814-2985-5492.5 16

princ"ipal of the Loan and interest on the Loan as provided in Section 2.04 hereof and the Borrower Note. All payments to Lender shall become due at 1:00 p.m., Pacific Time, on the day when due without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived. As security for its obligation to pay the principal of, premium, if any, and interest in accordance with this Section and Section 2.08. hereof and the Authority Note, and interest on the loan from Lender, Authority assigns to Lender all of Authority's right to receive Loan Payments from Borrower hereunder, all of Authority's rights hereunder (except for the right to receive any Additional Payments to the extent payable to Authority, any rights of Authority to indemnification and rights of notice, inspection and consent) and all of Authority's right, title and interest in and to the Property, and Authority irrevocably constitutes and appoints Lender and any present or future officer or agent of Lender as its lawful attorney, with full power of substitution and resubstitution, and in the name of Authority or· otherwise, to collect the Loan Payments and any other payments due Lender hereunder, as assignee of Authority, and to sue, as assignee of Authority hereunder, in any court for such Loan Payments or other payments due to Lender hereunder as assignee of Authority, and to withdraw or settle any claims, suits or proceedings pertaining to or arising out of this Agreement upon any terms. Such Loan Payments and other payments due Lender hereunder shall be made by Borrower directly to Lender, as Authority's assignee, and shall be credited against Authority's payment obligations hereunder and under the Authority Note. No provision, covenant or agreement contained in this Agreement. or any obligation imposed on Authority herein, or the breach thereof, shall constitute o:t;;give rise to or impose upon Authority a pecuniary liability, a charge upon its general credit··or taxing powers or a pledge of its general revenues. In making the agreements, provisions and covenants set forth in this Agreement, Authority has not obligated itself except with respect to the application of the Loan Payments to be paid by Borrower hereunder. No recourse shall be had by Lender or Borrower for any claim based on this Agreement or the Tax Regulatory Agreement against any director, officer, employee, counsel or agent of Authority alleging personal liability on the pati of such person, unless such claim is based on the willful dishonesty of or intentional violation of law by such person.

Section 2.06. Payment on Non-Business Days. Whenever any payment to be made hereunder shall be stated to be due on a day which is not a Business Day, such payment may be made on the next succeeding Business Day, an,d such extension: of time shall in such case be included in the computation of interest or the fees hereunder, as the case may be.

Section 2.07. Loan .Payments To Be Unconditional. The obligations of Borrower to make the Loan Payments required under this A1iicle II and the Borrower Note and to make other payments hereunder and to perform and observe the covenants and agreements contained herein, including the obligation to make all Additional Payments, shall be absolute and unconditional in all events·, without abatement, diminution, deduction, setoff or defense for any reason. Notwithstanding any dispute between Borrower and any of Authority, Lender, any Vendor or 1

any other person, Borrower shall make all Loan Payments when due and shall not withhold any Loan Payments pending final resolution of such dispute, nor shall Borrower assert any right of set-off or counterclaim against its obligation to make such payments required under this Agreement.

48 I 4-2985-5492.5 17

Section 2.os: Maturity and Prepayments.

(a) Borrower may, in its discretion, prepay the Loan and the Borrower Note in whole at any time after December 21, 2010 by paying the applicable Prepayment Amount together with any Additional Payments then due.

1

(b) Borrower shall prepay the Loan and the Borrower Note in whole at any time pursuant to Article X hereof by paying the Prepayment Amount (without prepayment penalties) together with any Additional Payments then due.

(c) Borrower shall prepay the Loan and the Borrower Note in full immediately upon demand of Lender after the occurrence of an Event of Default by paying the applicable Prepayment Amount together with any Additional Payments then due.

(d) Borrower shall prepay the Loan and the Borrower Note in full immediately upon demand of Lender after the occurrence of a Determination of Taxability by paying the applicable Prepayment Amount plus an amount necessary to supplement the prior Loan Payments to the Gross-Up Rate.

(e) The Loan shall be prepaid in part with any funds remaining in the Escrow Fund upon termination of the Escrow Agreement as provided in Section 3.04 of the Escrow Agreement.

Section 2.09. Special Obligations. The Authority Note, as provided herein, together with the interest thereon, shall not be deemed to constitute a debt, liability or general_ obligation of the State or any agency or instrumentality of the State or the lending of credit of the State or any political subdivision thereof or a pledge of the faith and credit or taxing power of the State or any agency or instrumentality of the State, but shall be payable solely from the funds provided therefor pursuant to this Agreement. The Authority Note, as provided herein, is only a special, limited obligation of Authority as provided by the Act, and Authority shall under no circumstances be obligated to pay the principal of, premium, if any, or interest on the Authority Note, as. provided herein, or other costs incident thereto except from Loan Payments. Neither the State nor any agency or instrumentality of the State is in any manner obligated to make any appropriation for such payments. No tax funds or governmental revenue may be used to pay the principal of, premium, if any, or interest on the Authority Note.

Section 2.10. Additional Payments. Borrower shall pay to Authority or to Lender, as appropriate, the following "Additional Payments" in addition to the Loan Payments payable by Borrower: such amounts incurred by Lender or Authority after the Closing Date as shall be required by Lender or Authority in payment of any reasonable costs and expenses incurred in connection with their performance or enforcement of the Loan Documents, and the financing of the Property, including but not limited to: (a) application, commitment or financing fees, if any; (b) indemnification payments pursuant to Section 8.03 and 8.15 hereof; (c) all taxes and assessments of any type or character charged to the Authority affecting the amount available to the Authority from payments to be received hereunder or Authority or Lender in any way arising due to the transactions contemplated hereby (including taxes and assessments assessed or lev!ed

4814-2985-5492.5 18

by any public agency or Governmental Authority of whatsoever character having power to levy taxes or assessments), but excluding franchise taxes based upon the capital and/or income of the Lender and taxes based upon or measured by the net income of Lender; (d) the reasonable fees and expenses of such accountants, consultants, attorneys and other experts as may be engaged by Authority or Lender to prepare audits, financial statements, reports or opinions or to provide such other services required under the Loan Documents, but only if Borrower has failed to provide such audits, financial statements, reports, opinions or other services when reasonably requested in writing by Lender or Authority or otherwise in connection with the enforcement of the Loan; (e) insurance premiums not paid hereunder; (f) an annual administration fee to Authority in the amount of $500 payable on July 1 of each year, beginning July 1, 2010 and (g) all other reasonable, direct and necessary administrative costs of Lender (incurred after a Default) or Authority (incurred at any time) and such other charges required to be paid in order to enforce its rights (other than its rights under Section 8.08 except as provided therein) under this Agreement. Such Additional Payments shall be billed to Borrower by Lender or Authority, as the case may be, from time to time, together with a statement certifying that the amount so billed has been paid for one or more of the items described, or that such amount is then payable for such items. Amounts so billed' shall be due and payable by Borrower within 30 days after receipt of the bill by Borrower.

Section 2.11. Security. The obligations of Bonower to make the Loan P,ayments required under this Article II and the Borrower Note and to make other payments in accordance with the Loan Documents and to perform and observe the covenants and agreements contained herein shall be secured pursuant to the Deed of Trust creating a lien on the.Property.

Section 2.12. Recording of Real Estate Instruments. The Borrower shall, at its expense, record the Deed of Trust and all amendments thereto in .the Official Records of the Office of the County Clerk of San Bernardino County, California. Within 10 days after request for any confirmation of any recording or filing required by this Section, the Borrower. shall deliver to Lender the signed documents requested or evidence satisfactory to Lender to the effect that such recording or filing has been duly accomplished. The Borrower authorized Lender to file such financing statements as inay be necessary to perfect Lender's security in a form satisfactory to Lender and provide to Lender, within 60 days of the date of delivery of this Agreement, a UCC-1 search certificate with respect to the Borrower.

Section 2.13. Escrow Fund. Borrower shall use the proceeds deposited into the Escrow Fund by the Lender to finance and refinance the Project.

ARTICLE III

CONDITIONS PRECEDENT

Section 3.01. Closing Conditions. Lender's agreement to make the loan to Authority hereunder and to disburse the Loan Proceeds shall be subject to. the condition precedent that Lender and Authority shall have received all of the following, each in form and substance satisfactory to Lender and Authority:

4814-2985-5492.5 19

-1 I

! I l "1

(a) this Agreement, properly executed cin behalf of Authority and Borrower, and each of the Exhibits hereto properly completed;

(h) the Deed of Trust, properly executed on behalf of Borrower and the Assignment Agreement properly executed by Authority in favor· of Lender;

(c) the Tax Regulatory Agreement, properly executed on behalf of Authority and Borrower;

(d) the Borrower Note, properly executed on behalf o_f Borrower;

(e) the Authority Note, properly executed on behalf of Authority;

(f) the Escrow Agreement, properly executed by the Escrow Agent, the Borrower and the Lender;

(g) a certificate of Borrower, certifying as to (i) the resolutions of the board of directors of Borrower authorizing the execution, delivery and performance of the Loan Documents and any related documents, (ii) the Articles of Incorporation and Bylaws of Borrower, and (iii) the signatures of the officers or agents of Borrower authorized to ~xecute and deliver the Loan Documents and other instruments, agreements and certificates on behalf of Borrower;

(h) certified copies of the Articles of Incorporation of Borrower dated not more than 30 days prior to the Closing Date;

(i) a certificate of good standing issued as to Borrower by the Secretary of State of the State of California not more than 3 0 days prior to the Closing Date;

U) a certificate of good standing issued as to Borrower by the .Franchise Tax Board of the State of California dated not more than 30 days prior to the Closing Date;

(k) certificates of the insurance required hereunder, containing a lender's loss payable clause or endorsement in favor of Lender;

(1) current searches of appropriate filing offices showing that no state or federal tax liens have been filed and remain in effect against Borrower dated not more than 30 days prior to the Closing Date;

(m) a completed and executed Form 8038 or evidence of filing thereof with the Secretary of Treasury;

(n) a resolution or evidence of other official action taken by or on behalf of Authority to issue the Loan and to authorize the transactions contemplated hereby;

(o) evidence that the financing and refinancing of the Project has been approved by the "applicable elected representative" of the County of San Bernardino

4814-2985-5492.5 20

after public hearings held upon reasonable notice and that such financing and refinancing of the Project has been approved for purposes of the Act;

(p) a closing certificate of Authority;

(q) an opinion of counsel to Borrower, addressed to Lender and Authority, in substantially the form attached hereto as Exhibit B; ·

(r) an opinion of counsel to Authority, addressed to Lender and Authority, in form and substance acceptable to Lender and Authority;

(s) an opinion of Bond Counsel, addressed to Authority and Lender, in form and substance acceptable to Authority and Lende:t;;

(t) payment of Lender's fees, commissions and expenses required by Section 13.01 hereof;

(u) payment of Authority's fees, commissions and expenses,. including, but not limited to; an initial fee due on the Closing Date equal to $21,250;

(v) an investor letter of representation executed by Lender and addressed to Authority, Bond Counsel and Borrower, in the form attached hereto as Exhibit C;· ·,

(w) no Default or Event of Default has occurred and is continuing;

(x) an ALTA.. Loan Policy of Title Insurance (2006) with coverage in an amount equal to the initial principal amount of the Loan, with reinsurance and endorsements as Lender may require, containing no exceptions to title (printed or otherwise) which are unacceptable to Lender, and insuring that the Deed of Trusfis a first-priority lien on the Prope1iy and related collateral;

(y) current Site Assessment and land survey regarding the Property, each of which has been approved in form, scope and substance by Lender;

(z) a copy of the Appraisal with respect to the real property securing the Property prepared by a qualified MAl appraiser (who is completely independent from . Borrower, each Constituent Party, and their affiliates and related persons, and is acceptable to and engaged by Lender), in form, scope and substance acceptable to· Lender, in conformity with the requirements of Lender, and approved in accordance with the requirements of Lender, showing the value of the Property equal to the amount of the Loan, and/or such other valuations as may be required by Lender; ·

(aa) a certificate executed by Borrower stating that all representations, warranties and covenants of Borrower contained herein are true and correct in all material respects as of the date hereof (if given prior to or contemporaneously herewith) or as of the date thereof (if given after the date hereof);

4814-2985-5492.5 21

(bb) Subordination Agreements and Tenant Estoppel Certificates as may be required by Lender; and

( cc) any other documents or items reasonably required by Lender or Authority.

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS OF AUTHORITY

Authority represents, warrants and covenants for the benefit of Lender and Borrower, as follows:

(a) Authority is a public entity duly organized and validly existing under the laws of the State.

(b) Authority will exercise its best efforts to preserve and keep in full force and effect its existence as a public entity. '

(c) Authority is authorized under the Act to enter into the Loan Documents to which Authority is a party and the transactions contemplated hereby and thereby and to.' perform all of its obligations hereunder and thereunder. t

(d) Authority has duly authorized the execution and delivery of the Loan Documents to which Authority is a party under the terms and provisions of the resolution adopted by its Board of Directors, and further represents, covenants and warrants that all· actions by the Authority's members have occurred and all other requirements have been met and procedures have occurred in order to ensure the enforceability of the Loan Documents to which Authority is a party against Authority. , Authority has taken all necessary action and has complied with all provisions of the Act, including .but not limited to the making of the findings required by the Act, required to make the Loan Documents to which Authority is a party the valid and binding obligations of Authority.

(e) The authorized officer of the Board of Directors of Authority executing the Loan Documents to which Authority is a party and any related documents has been duly authorized to execute and deliver the Loan Documents to which Authority is a party and such related documents under the terms and provisions of a resolution of Authority or by other appropriate official action.

(f) The Loan Documents to which Authority is a party are legal, valid and. binding obligations of Autho,rity, enforceable in accordance with their respective terms, except to the extent limited by bankruptcy, reorganization or other laws of general application relating to or affecting the enforcement of creditors' rights, to the application of equitable principles and to the limitations on enforcement remed.ies against public entities in California.

·(g) Authority has assigned to Lender all of Authority's rights in the Property and this Agreement (except any indemnification payable to Authority, rights to notice, the right to receive Additional Payments to the extent payable to Authority and any rights

4814-2985-5492.5 22

to inspection and consent hereunder) including the assignment of allrights in the security interest granted to Authority by Borrower.

(h) Authority will not pledge, mortgage or assign this Agreement or its duties and obligations hereunder to any person, firm or corporation, except as provided under the terms hereof.

(i) None of the execution and delivery of the Loan Documents to which Authority is a party, the consummation of the transactions contemplated hereby or thereby or the fulfillment of or compliance with the terms and conditions of the Loan Documents to which Authority is a party violates any law, rule, regulation or order, conflicts with or results in a breach of any of the terms, conditions or provisions of any restriction or any agreement or instrument to which Authority is now a party or by which it is bound or constitutes a default under any of the foregoing or results in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of Authority under the terms of any instrument or agreement.

G) There is no action, suit, proceeding, claim, inquiry or investigation, at law .. or in equity, before or by any court, regulatory agency, public board or body p~nding or, to the best of Authority's knowledge, threatened against or affecting Authority, challenging Authority's authority to enter into the Loan Documents to which Authority is a party or any other action wherein an unfavorable, ruling or finding would adversely affect the enforceability of the Loan Documents to which Authority is a party or any other transaction of Authority which is similar hereto, or the exclusion of the Interest from gross income for federal tax purposes under the Code, or would materially and adversely affect any of the transactions contemplated by this Agreement.

(k) Authority will submit or cause to be submitted to the Internal Revenue Service Form 8038 (or other information reporting statement) at the time and in the form required by the Code.

(I) The financing of the Property has been approved by the "applicable elected representative" (as defined in Section 147(±) of the Code) of the County of San Bernardino after public hearings held upon reasonable notice after a public hearing held upon reasonable notice and that such financing of the Property has been approved for purposes of the Act.

(m) Authority will comply fully at all times with the provisions contained in the Tax Regulatory Agreement that directly relate to Authority, and Authority will riot take any action, or omit to take any action, which, if taken or omitted, respectively, would violate the Tax Regulatory Agreement.

(n) Authority will take no action that would cause the Interest to ·become includable in gi·oss income for federal income tax purposes under the Code (including, without limitation, intentional acts under Treas. Reg. § 1.148-2( c) or consenting to a deliberate action within the meaning ofTreas. Reg.§ 1.141-2(d)), and Authority will take

4814-2985-5492.5 23

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and will cause its officers, employees and agents to take all affirmative actions legally within its power necessary to ensure that the Interest does not become includable in gross income of the recipient for federal income tax purposes under the Code (including, without limitation, the calculation and payment of any rebate required to preserve such exclusion).

(o) To the best knowledge of Authority, no member, officer or other official of Authority has any financial interest whatsoever in Borrower or in the transaction contemplated by this Agreement.

ARTICLE V

'REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER

Borrower represents, warrants and covenants for the benefit of Lender and Authority, as follows:

(a) Borrower is a nonprofit religious corporation, duly organized, validly existing and in good standing under the laws of the State of California, has pow~r to enter, into the Loan Documents to which Borrower is a party and by proper action,, has duly authorized the execution and delivery of the Loan Documents to which Borrower is a party, Borrower is in good standing and is duly licensed or qualified to transact business in the State and in all jurisdictions where the character of the property owned or leased or the nature of the business transacted by it makes such licensing or qualification necessary.

(b) Borrower has the requisite authorization to execute and deliver the Loan Documents to which Borrower is a party under the terms and provisions of the resolution of the Borrower, or by other appropriate official approval, and further represents, covenapts and warrants that .all requirements have been met, and procedures have occurred in order to ensure the enforceability of the Loan Documents to which Borrower is a party and the Loan Documents to which Borrower is a party have been duly authorized, executed and delivered.

(c) . The officer of Borrower executing the Loan Documents to which Borrower is a party and any related documents· has been duly authorized to execute and deliver the ·Loan Documents to which Borrower is a party and such related documents under the terms and provisions of a resolution of Borrower.

(d) The Loan Documents to which Borrower is a party constitute valid and legally binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except to the extent limited by bankruptcy, reorganization or other laws and equitable principles of general application relating to or affecting the en~orcement of creditors' rights.

(e) The execution and delivery ofthe Loan Documents to which Borrower is a party, the consummation of the transactions contemplated hereby and thereby and the

4814-2985-5492.5 24

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fulfillment of the terms and conditions hereof and thereof do not and will not (i) violate any law, rule, regulation or order, (ii) conflict with or result in a breach of any of the terms or conditions of the articles of incorporation or bylaws of Borrower or of any corporate restriction or of any agreement or instrument to which Borrower is now a party and do not and will not constitute a default under any of the foregoing or (iii) result in the creation or imposition of any liens, charges or encumbrances of any nature upon any of the property or assets of Borrower contrary to the terms of any instrument or agreement. ·

(f) The authorization, execution, delivery and performance ofthis Agreement by Borrower do not require submission to, approval of, or other action by any Governmental Authority or agency other than Authority, which action with respect to this Agreement has not been taken and which is final and nonappealable.

(g) There is no action, suit, proceeding, claim, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body pending or, to the best of Borrower's knowledge, threatened against or affecting Borrower, challenging Borrower's authority to enter into the Loan Documents to which Borrower is a party or any other action wherein an unfavorable ruling or finding would adversely ·affect the enforceability of the Loan Documents to which Borrower is a party or any·.· other transaction of Borrower which is similar hereto, or the exclusion of the Interest on the Authority Note from gross income for federal tax purposes under the Code;· or would materially and adversely affect any of the transactions contemplated by this Agreement.

(h) The Property is properly zoned for its current and anticipated use and the use of the Property and the Improvements will not violate any applicable zoning, land use, environmental or similar law or restriction. The following representations and warranties of Borrower are made, to the best of Borrower's knowledge, without regard to whether Lender ol' Borrower has, or hereafter obtains, any knowledge or report of the environmental condition ofthe Property.

48 I 4-2985-5492.5

(i) Except as set forthin the Environmental Report, Property and the operations conducted thereon do not violate any Governmental Requirements and/or Legal Requirements (including all applicable zoning ordinances, building and other municipal codes, flood disaster laws, and Environmental Laws).

(ii) Except as set forth in the Environmental Report, the Property and operations conducted thereon by the current owner or operator of such Property are not in violation of or subject to any existing, pending, or threatened action, suit, investigation, inquiry, or proceeding by any governmental or nongovernmental entity or person or to any remedial obligations under any Environmental Law.

(iii) All notices, permits, licenses, or similar authorizations, if any, required to be obtained or filed in connection with Borrower's ownership, operation, or use of the Property, including the past or present generation, treatment, storage, disposal, or release of a Hazardous Material into the environment, have been duly obtained or filed.

25

4814-2985-5492.5

(iv) Except as set forth in the Environmental Report, the Property does not contain (whether located on, in, or under the Property) any Hazardous Material (except for Hazardous Material reasonably required in connection with the Borrower's (and the Borrower's tenants) research and health care related activities, and cleaning and other products required in connection with the routine operation, maintenance or repair of the Property in material compliance with Environmental Laws).

(v) Borrower has taken all reasonable steps necessary to determine if any Hazardous Materials have been generated, treated, placed, held, located, or otherwise released on, under, from, or about the Property.

(vi) Borrower has not undertaken, permitted, authorized, or suffered and will not undertake, permit, authorize, or suffer the presence, use, manufacture, handling, generation, transportation, storage, treatment, discharge, release, burial, or disposal on, under, from or about the Property of any Hazardous~ Material, or the transportation to or from the Property of any Hazardous Material ( e?(cept for Hazardous Material reasonably required in connection with the Borrower's (and the Borrower's tenants) research and health care related activities, and cleaning and other products required in connection with the routine operation, maintenance or repair of the Property in material compliance with Environmental Laws).

(vii) . Except as disclosed in writing to Lender prior to the date hereof, to Borrower's knowledge, there is no pending or threatened litigation, proceeding, or investigation before or by any administrative agency in which any person or entity . alleges or is investigating any alleged presence, release, threat of release, placement on, under, from or about the Property, or the manufacture, handling, generation, transportation, storage, treatment, discharge, burial, or disposal on, under, from or about the Property, or the transportation to or from the Property, of any Hazardous Material.

(viii) Except as disClosed in writing to Lender prior to the date hereof, Borrower has not received any notice, and has no actual kllowledge, that any Govermnental Authority or any employee or agent hereof has determined, or threatens to determine, or is investigating any allegation that there is a presence, release, threat of release, placement on, under, from or about the Property, or the use, manufacture, handling, generation, transportation, storage, treatment, discharge, burial, or disposal on, under, from or about the Property, or the transpmiation to or from the Property, of any Hazardous Material.

(ix) Except as disclosed in writing to Lender prior to the date hereof, there have been no communications or agreements with any Governmental Authority or any private entity, including any prior owners or operators of the Property, relating in any way to the presence, release, threat of release, placement on, under or about the Property, or the use, manufacture, handling, generation, transportation, storage, treatment, discharge, burial, or disposal on, under or about

26

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the Property, or the transportation to or from the Property, of any Hazardous Material.

(x) Except as set forth in the Environmental Report, neither Borrower nor, to the knowledge of Bon-ower, any other person, including, without limitation, any predecessor owner, tenant, licensee, occupant, user, or operator of all or any portion of the Property, has ever caused, permitted, authorized or suffered, and Borrower will not cause, permit, authorize, or suffer, any Hazardous Material to be placed, held, located, or disposed of, on, under or about any other real property, all or any portion of which is legally or beneficially owned (or any interest or estate therein which is owned) by Borrower in any jurisdiction now or hereafter having in effect a so-called "superlien" law or ordinance or any part thereof, the effect of which law or ordinance would be to create a lien on the Property to secure any obligation in connection with the "superlien" law of such other jurisdiction.

(xi) Borrower has been issued all federal, state, ·and local licenses, certificates, or permits relating to Bon-ower's facilities, business assets, property, leaseholds, and equipment which are required pursuant to any Environmental, Laws.

(xii) Except as set forth in the Environmental Report or otherwise disclosed in writing to Lender prior to the date hereof, no underground storage tanks (including petroleum storage tanks) have ever been or are now present on or under the Property.

(i) Bon-ower shall (i) comply in all material respects with applicable Environmental Laws; (ii) notify Lender immediately of any proceeding or inq11iry by any governmental, and any proceeding initiated by any nongovernmental entity or person with respect to the presence of any Hazardous Material on, under, from or about the Property, the migration thereof from or to or about the J:>roperty, the migration thereof

·from or to other property, the disposal, storage or treatment of any Hazardous Material generated or used on, under or about the Property; (iii) notify Lender immediately of all claims made or threatened by any third party against Borrower or the Property or, promptly upon becoming aware thereof, against any other owner or operator of the Property relating to any loss or injury resulting from any Hazardous Material; (iv) notify. Lender immediately of Borrower's knowledge of any Hazardous Material located on, in or under the Property; (v) notify Lender immediately of Borrower's discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be subject to any investigation or cleanup of the Property pursuant to any Environmental Law; (vi) promptly remove such illegal Hazardous Materials and remediate the Property in material compliance with Environmental Laws; (vii) promptly forward to Lender copies· of all orders, notices, permits, applications or other communications and reports in connection with any spill, illegal discharge, illegal release or the illegal presence of any Hazardous Material ·and (viii) monitor, and establish and maintain appropriate systems and methods to monitor, the use of the Property to maintain compliance of the Property with all Environmental

48 I 4-2985-5492.5 . 27

Laws. Borrower shall not cause and shall prohibit any other Person within the control of Bonower from (A) causing any spill, illegal discharge or illegal release, or the use, storage, generation, manufacture, installation, or disposal, of any Hazardous Materials at, upon, under, within or about the Property or the transportation of any Hazardous Materials to or from the Property (except for medical waste and other similar materials or cleaning and other products used in connection with operation, maintenance or repair of the Property in material compliance with Environmental Laws) or· (B) installing any underground storage tanks at the Property. Borrower shall provide to Lender, at Borrower's expense promptly upon the written request of Lender (where reasonably warranted) from time to time an update to the Site Assessment to assess the presence or absence of any Hazardous Materials and the potential costs in connection with abatement, cleanup or removal of any Hazardous Materials found on, under, at or within the Property. Bonower shall pay the cost of no more than one such update in any 12-month period, unless Lender's request for an update to the Site Assessment is based on information provided under this subsection a reasonable suspicion of Hazardous Materials at or near the Property not in material compliance with all Environmental Laws, a breach of representations under subsection (h) or (i) of this Section, or a Default or an Event of Default, in which case any such update shall be at Bonower's expense. Borrower shall not use, generate, manufacture, produce, store, release, discharge, treat, or;. dispose of on, under, from or about the Prope1iy or transport to or from the Property any Hazardous Material or allow any other person or entity to do so, except for any Hazardous Material which is used in the ordinary course of the busin~ss of Borrower (or Borrower's tenants). Borrower shall permit Lender or Authority to join and participate in, as a party if it so elects, any legal proceedings or actions initiated with respect to the Property in connection with any Environmental Law or Hazardous Material, and Borrower shall pay all attorneys' fees, incurred by Authority or Lender in connection therewith. In the event that any Remedial Work is reasonably necessary or desirable, Borrower shall commence and thereafter diligently prosecute to completion all such Remedial Work within a reasonable period of time after written demand by Lender or Authority for performance thereof (or any specific period of time as may be required under any Legal Requirement), with such Remedial Work being commenced within thirty (30) days of Lender's or Authority's written demand. Remedial Work shall be performed

. by contractors approved in advance by Lender, and under the supervision of a consulting engineer approved by Lender. All costs and expenses of such Remedial Work shall be paid by Borrower including Lender's and Authority's reasonable attorneys' fees and costs incurred in connection with monitoring or review of such Remedial Work. In the event Borrower shall fail to timely commence, or cause to be commenced, or fail to diligently prosecute to completion, such Remedial Work, Lender or Authority may, but shall not be required to, cause such Remedial Work to be performed, and all costs and expenses thereof, or incurred in connection therewith, shall become part of the Indebtedness. The covenants contained in this Section shall survive the reconveyance or release, as applicable, of the lien of the Deed of Trust, or the extinguishment of such liens by foreclosure or action in lieu thereof.

G) No condemnation has been commenced or, to Bonower's knowledge, is ~ontemplated with respect to all or any portion of the Property or the Improvements or for the relocation of roadways providing access to the Property or the Improvements.

4814-2985-5492.5 28

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(k) The Property and the Improvements have adequate rights of access to public ways and are served by adequate water, sewer, sanitary sewer and storm drain facilities. All public utilities necessary or convenient for the full use and enjoyment of the Property and the Improvements are or will be distributed to the Property and the Improvements through equipment and infrastructure that is privately owned by Borrower or a-Borrower's Affiliate, and all such utilities are or will be connected so as to serve the Property and the Improvements without passing over other property other than property owned by Borrower or a Borrower's Affiliate, except to the extent such other property is subject to a perpetual easement for such utility benefiting the Property or the Improvements. All roads necessary for the full utilization of the Property and the Improvements for their current purposes have been completed and are connected to public roads without passing over any other prope1iy other than property owned by Borrower or a Borrower's Affiliate.

(1) Borrower has paid or caused to be paid to the proper authorities when due all federal, state and local taxes, if any, required to be paid by it.

(m) Borrower has or will have good and absolute title to the Property and the Improvements, and all proceeds thereof, free and clear of all mortgages, security: interests, liens and encumbrances except for the security interest created.pursu~nt to this Agreement, the lieris created pursuant· to the Deed of Trust when recorded:· and the· Permitted Encumbrances.

(n) All financial and other information provided to Lender or Authority by or on behalf of Borrower in connection with Borrower's request for the Loan contemplated hereby is true and correct in all material respects and Borrower has not omitted to provide Lender with any information which would be material to Lender's decision to enter into this Agreement and, as to projections; valuations or pro forma financial statements, present a good faith opinion as to such projections, valuations arid pro forma condition and results.

( o) Borrower will aid and assist Authority in connection with preparing and submitting to the Internal Revenue Service a Form 8038 (or other applicable information reporting statement) at the time and in the. form required by the Code.

(p) Borrower will comply fully at all times with the Tax Regulatory Agreement, andBorrower will not take any action, or omit to take any action, which, if taken or omitted, respectively, would violate the Tax Regulatory Agreement, and the representations and warranties contained in the Tax Regulatory Agreement are true and correct.

( q) Expenses for work done by officers or employees of Borrower in connection with the Project will be included as a Project Cost, if at all, only to the extent (i) such persons were specifically employed for such particular purpose, (ii) the expenses do not exceed the actual cost thereof and (iii) such expenses are treated or capable of being treated (whether or not so treated) on the books of Borrower as a capital expenditure in conformity with GAAP applied on a consistent basis.

4814-2985-5492.5 29

(r) Any costs incurred with respect to that part of the Project paid from the Loan Proceeds shall be treated or capable of being treated on the books of Borrower as capital expenditures in conformity with GAAP applied on a consistent basis.

(s) No part of the Loan Proceeds will be used to finance inventory or will be used for working capital or to finance any other cost not constituting a Project Cost or Cost of Issuance. ·

(t) The Project consists of property of the character subject to the allowance for depreciation under Section 167 of the Code.

(u) To the best of Borrower's knowledge, no member, officer. or other official of Authority has any financial interest whatsoever in Borrower or in the transactions contemplated by this Agreement.

(v) To the best of Borrower's knowledge, (i) the Property; the Improvements and the operation thereof comply . and will continue to comply with all Legal Requirements, including that all requisite certificates of occupancy, building permits, and other licenses, certificates, approvals or consents required of any Governmental Authority have been or will be issued without variance or condition, (ii) following any casjlalty, the improvements which form a part of the Project may be reconstructed and the c.ljrrentuse thereof restored and (iii) that there is no litigation, action, citation, injunctive proceedings, or like matter pending or threatened with respect to the validity of such matters.

(w) To the best of Borrower's knowledge, no condemnation or adverse zoning or usage change proceeding has occurred or has been threatened against the Property or the Improvements; the Property and the Improvements have not suffered any significant damage by fire or other casualty which has not been repaired; no law, regulation, ordinance, moratorium, injunctive proceeding, restriction, litigation, action, citation or similar proceeding or matter has been enacted, adopted; or threatened by any Governmental Authority, which would have a material adverse effect on Borrower or the Project.

(x) Borrower has executed and delivered to California Health Facilities Financing Authority its "Certification and Agreement Regarding Community Service Obligation" pursuant to California Government Code§ 15459 et. seq. with respect to the Project and is in full compliance with the terms thereof.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF LENDER

Lender represents and warrants for the benefit of Authority and Borrower, as follows:

(a) . Lender is a corporation duly organized, validly existing and in good standing under the ·raws of the State of Delaware, has power to enter into the Loan

4814-2985-5492.5 30

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Documents to which Lender is a party and by proper corporate action has duly authorized the execution and delivery of the Loan Documents to which Lender is a party.

(b) The Loan Documents to which Lender is a party constitute valid and legally binding obligations of Lender, enforceable against Lender in accordance with their respective terms, except to the extent limited by bankruptcy, reorganization or other laws of general application relating to effecting the enforcement of creditors' rights.

(c) The execution and delivery of the Loan Documents to which Lender is a party, the consummation of the transactions contemplated hereby and thereby and~Jhe fulfillment of the terms and conditions hereof and thereof do pot and will not violate any law, rule, regulation or order, conflict with or result in a breach of any of the terms or conditions of the certificate of incorporation of Lender or of any agreement or instrument to which Lender is now a party and do not and will not constitute a default under any of the foregoing or result in the creation or imposition of any liens, charges or encumbrances of any nature upon any of the property or assets of Lender contrary to the terms of any instrument or agreement.

(d) There is no action, suit, proceeding, claim, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body p~nding or, to the best of Lender's knowledge, threatened against or affecting Lender, challenging Lender's authority to enter into the Loan Documents to which Lender is a party or any other action wherein an unfavorable ruling or finding would adversely affect the enforceability against Lender of the Loan Documents to which Lender is a party or any. other transaction of Lender which is similar hereto, or would materially and adversely affect any performance by Lender contemplated by this Agreement.

(e) Lender has sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal and other tax-exempt obligations, to be able to evaluate the risks and merits of the investment represented by this Agreement including the Authority Note, and is able to bear the economic risk of such investment. Lender has made its own inquiry and analysis with respect to Borrower, Authority, this Agreement, the payments of principal of, premium, if any, and interest on the Authority Note and the Loan Payments and the security therefor, and other material factors affecting the security and payment of this Agreement, the payments of principal of, premium, if any, and interest on the Authority Note and the Loan Payments.

(f) Lender has either been supplied with or has had access to information, including financial statements and other financial information which it has requested and has had the opportunity to ask questions and receive answers concerning Borrower, Authority, this Agreement the payments of principal of, premium, if any, and interest on the Authority Note and the Loan Payments and the security therefor, so that it has been able to make its decision to make the Loan Proceeds available in accordance with the provisions hereof in exchange for the right to receive the payments of principal of, premium, if any, and interest on the Authority Note and the Loan Payments and enter into and perform its obligations under this Agreement.

4814-2985-5492.5 31

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(g) Lender acknowledges that this Agreement, including the right to receive payments of principal of, premium, if any, and interest on the Authority Note and Loan Payments (i) are not being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, (ii) shall not be listed on any stock or other securities exchange and (iii) shall be issued in a form which may not be readily marketable.

(h) Lender acknowledges that this Agreement, including the right to receive payments of principal of, premium, if any, and interest on the Authority Note and Loan Payments, have not been registered under the Securities Act of 1933, as amended, and that such registration is not legally required. Lender represents to Authority that it is entering into this Agreement, including obtaining the right to receive payments of, premium, if any, and interest on the Authority Note and Loan Payments, for investment for its own account and not with a present view toward resale or the distribution thereof, except for any subsequent sale or transfer· permitted under Article XI of this Agreement, to an Affiliate, but Lender reserves the right to transfer the Note or any interest thereon.

ARTICLE VII

TITLE TO PROPERTY

Section 7.01. Change in Name or Corporate Structure of Borrower; Change in Location of Borrower's Principal Place of Business. Borrower's chief executive office is located at the address set forth above, and all of Bon-ower's records relating to its business are kept at such location. Borrower hereby agrees to provide written notice to Lender and Authority of any change or proposed change in its name, organizational structure, state of organization, place of business or chief executive office. Such notice shall be provided 30 days in advance of the date that such change or proposed change is planned to take effect.

Section 7.02. Liens and Encumbrances to Title. Bon-ower shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim (together, "Liens") on or with respect to the Property other than the rights of Lender as herein provided and the Permitted Encumbrances. Borrower shall promptly, at its own expense, take such action as may be necessary duly to discharge or remove any such Lien. Borrower shall reimburse Lender for any expenses incurred by Lender to discharge or remove any Lien. (

Section 7.03. Assignment of Insurance .. Subject to the provisions of Sections 8.06 and 10.01, as additional security for the payment and performance of Borrower's obligations hereunder, Borrower hereby assigns to Lender, as assignee of Authority, any and all moneys (including, without limitation, proceeds of insurance and refunds of unearned premiums) due or to becom~ due under, and all other rights of Borrower with respect to, any and all policies of insurance now or at any time hereafter covering the Prope1iy (but only the portion of such policy pertaining to the Property) or any evidence thereof or any business records or valuable papers pertaining thereto, and Borrower hereby directs the issuer of any such policy to pay all such moneys directly to Lender. Subject to the provisions of Sections 8.06 and 10.01, Borrower hereby assigns. to Lender, as assignee of Authority, any and all moneys due or to become due with respect to any condemnation proceeding affecting the Property. At any time, after the

4814-2985-5492.5 32

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occurrence of any Event of Default Lender may (but need not), in Lender's name or in Borrower's name, execute and deliver proof of claim, receive all such moneys, endorse checks and other instruments representing payment of such moneys, and adjust, litigate, compromise or release any claim against the issuer of any such policy or party in any condemnation proceeding.

Section 7.04. Authority Pledge of Loan Payments. Pursuant to Section 5451 of the Government Code of the State of California, the pledge of Loan Payments by Authority for the repayment of the principal of, premium, if any, and interest on the Authority Note constitutes a first lien and security interest which immediately attaches to such Loan Payments, and all proceeds of the foregoing, and is effective and binding against Authority, Borrower, their successors, creditors and all others asserting rights therein irrespective of whether those parties have notice of the pledge and without the need for physical delivery, recordation, filing or further act.

ARTICLE VIII

AFFIRMATIVE COVENANTS OF BORROWER

Borrower covenants that so long as any liabilities (whether direct or contingent,· liquidated or unliquidated) of Borrower to Lender under any of the Loan Documents . remain outstanding, and until payment in full of all of Borrower's obligations subject hereto~~J3orrower

. shall, unless Lender otherwise expressly waives in writing, comply with the following requirements:

Section 8.01. Reporting Requirements. Borrower will deliver, or cause to be delivered, to Lender and to Authority, each of the following, which shall be in form and detail reasonably acceptable to Lender and Authority, as to information requested by Authority:

(a) as soon. as available, and in a~y event within 150 days after the end of each fiscal year of Borrower beginning with the Fiscal Year ending December 31, 2009, one or more financial statements which, in the aggregate, shall include the Borrower and all such other Affiliates as Borrower determines (the "Borrower Financial Statements"). Such financial statements:

4814-2985-5492.5

(i) may consist of (x) consolidated or combined financial results including Borrower and one or more other Persons required to be consolidated or combined with Borrower under generally accepted accounting principles or (ii) special purpose financial statements including only Borrower;

(ii) shall be audited by a firm of nationally recognized independent certified public accountants approved by the Borrower as having been prepared in accordance with generally accepted accounting principles (except, in the case of special purpose financial statements, for required consolidation);

(iii) shall include a combined balance sheet, statement of operations and changes in net assets; and

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(iv) if more than one financial statement is delivered to the Lender pursuant to this clause (x), each such financial statement shall contain, as "other financial information," a combining or consolidating schedule from which financial information solely related to the Borrower may be derived.

(b) Unless a single financial statement (including a single special purpose financial statement) is delivered pursuant to clause (a) above for the Borrower, as soon as available, but in no event more than 150 days after the last day of each Fiscal Year beginning with the Fiscal Year ending December 31, 2009, an unaudited balance sheet, statement of operations and changes in net assets for such Fiscal Year for the Borrower, prepared by the Borrower based on the accompanying unaudited combining or consolidating schedules delivered with the audited financial statements described in clause (a) above.

(c) At the time of delivery of the financial statements, a certificate of the chief financial officer or vice president-finance of the Borrower, stating that the Borrower has made a review of the activities of the Borrower during the preceding fiscal year for the purpose of determining whether or not the Borrower has complied with all of the terms, provisions and conditions of this Agreement and that Borrower has kept, observed,, performed and fulfilled each and every covenant, provision and condition, of this Agreement on its part to be performed and Borrower is not in default in the performance or observance of any of the terms, covenants, provisions, or conditions, or if Borrower shall be in default, such certificate shall specify all such defaults and the nature thereof.

(d) as soon as available and in any event within ,60 days after the end of each fiscal quarter of Borrower, unaudited/internal balance sheet and statements of income, retained earnings and cash flow (whether showing such titles arnot) and changes in net, assets of Borrower, as at the end of and for such fiscal quarter and for the year to date period then ended, in reasonable detail and stating in comparative form the figures for the corresponding date and periods in the previous year, all prepared in accordance with

, GAAP applied on a basis consistent with the accounting practices reflected in the financial statements referred to in Article V(l) hereof and certified by the chief financial officer or vice president, finance of Borrower, subject to year-end audit adjustments; and accompanied by a certificate of that officer stating (i) that such financial statements have been prepared in accordance with GAAP applied on a basis consistent with the accounting practices reflected in the financial statements referred to in Article V(l) hereof, (ii) whether or not such officer has knowledge of the occurrence of any Default or Event of Default hereunder not theretofore reported and remedied and, if so, stating in reasonable detail the facts with respect thereto, and (iii) all relevant facts in reasonable detail to evidence, and the computations as to, whether Borrower is in compliance with the requirements set forth in Section 8.13 hereof and Section 4.6 of the Guaranty Agreement;

(e} immediately after the commencement thereof, notice in writing of all , litigation and of all proceedings before any governmental or regulatory agency affecting Borrower of the type described in Article V hereof or which seek a monetary recovery

4814-2985-5492,5 34

against Borrower in excess of $100,000 excluding medical malpractice claims covered by msurance;

(f) as promptly as practicable (but in any event not later than five Business Days) after an Authorized Borrower Representative obtains knowledge of the occurrence of any everit that constitutes a Default or an Event of Default under the Loan Documents, notice of such occurrence, together with a detailed statement by an Authorized Borrower Representative of the steps being taken by Borrower to cure the effect of such Default or Event of Default;

(g) promptly upon knowledge thereof, notice of any loss or destruction of any portion of the Property or the Improvements in excess of $500,000;

(h) promptly after the' amending thereof, copies of any and all amendments to Borrower's articles of organization or bylaws;

(i) promptly upon receipt of knowledge thereof by an Authorized Borrower Representative, notice of the violation -by Borrower of any law, rule or regulation,-the

I

violation of which could have a material adverse effect on the financial or operating. condition of Borrower or the condition of the Property or Borrower's or Lender'.s interest therein; ·

G) promptly upon Borrower's knowledge thereof, notice of any material adverse change in the financial or operating condition of Borrower; and

(k) such other information as Lender or Authority may reasonably request.

Section 8.02. Books and Records; Inspection and Examination. Borrower will keep accurate books of record and account for itsdf separate and apart from those of Borrower Affiliates, including its officers, pertaining to the Project, the Property and the Improvements and pertaining to Borrower's business and financial condition and such other matters ·as Lender ·and/or Authority may from time .to time reasonably. request in which true and complete entries will be made in accordance with GAAP consistently applied and, upon request of Lender, will permit any officer, employee, attorney or accountant for Lender and/or Authority to audit, review, make extracts from, or copy any and all organization and financial books, records and properties of Borrower at all times during ordinary business hours, and to discuss the affairs of Borrower with any of its officers, employees or agents. Borrower will permit Lender and/or Authority, or their employees, accountants, attorneys or agents, to examine and copy any or all of its records relating to the Project, the Property and the Improvements and to examine and inspect the Property and the Improvements at any time during Borrower's business hours upon request of Lender. Borrower agrees that Lender (including Lender's representatives and consultants) can visit with any pmiies to any of the Leases or Property Contracts. If an Event of Default has occurred and is continuing, the Borrower shall pay the cost of any such audit or review. ·

Section 8.03. Compliance With Laws; Environmental Indemnity. Borrower will (a) comply with the requirements of applicable laws and regulations, the noncompliance with which would materially and adversely affect its business or its financial condition, (b) comply

48 I 4-2985-5492.5 35

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I with all applicable Environmental Laws and regulations and obtain any permits, licenses or similar approvals required by any such laws or regulations and (c) use and keep the Property, and will require that others use and keep the Property, only for lawful purposes, without violation of any federal, state or local law, statute or ordinance. Borrower shall secure all permits and licenses, if any, necessary for the operation of the Property. Borrower will timely comply (to prevent any breach) with and satisfy all Governmental Requirements and Legal Requirements that affect or are otherwise related to the Property and the improvements, their use or occupancy.

As between Borrower, Authority and Lender, all risk of loss associated with noncompliance with Environmental Laws, or with the presence of any Hazardous Material at, upon, within, contiguous to or otherwise affecting the Property, shall lie solely with Borrower. Accordingly, Borrower shall bear all risks and costs associated with any loss (including any loss in value attributable to Hazardous Materials), damage or liability therefrom, including all costs of removal of Hazardous Materials or other remediation required by law. Borrower shall indemnify, defend and hold Lender, Authority and all members, officers and employees of Lender and Authority harmless from and against all loss, liabilities, damages, claims, costs and · expenses (including reasonable costs of defense) arising out of or associated, in any way, with the non-compliance with Environmental Laws, or the existence of Hazardous Materials in, on, or about the Property, or a breach of any representation, warranty or covenant contained in this Article, whether based in contract, tort, implied or express warranty, strict liability, qriminal or civil statute or common law, including those arising from the joint, concurrent, or comparative negligence of Lender or Authority; however, Borrower shall not be liable under such indemnification to the extent such loss, liability, damage, claim, cost or expense results directly and solely from Lender's or Authority's gross negligence or willful misconduct. Borrower's obligations under this Section shall arist?Upon the discovery of the presence of any Hazardous Material not in compliance with all applicable Environmental Laws, whether or not any Governmental Authority has taken or threatened any action in connection with the presence of any Hazardous Material, and whether or not the existence of any such Hazardous Material or potential liability on account thereof is disclosed in the Site Assessment and shall continue notwithstanding the repayment of the Loan or any transfer or sale of any right, title and interest in the Property (by foreclosure, deed in lieu of foreclosure or otherwise). Notwithstanding any provision in this Agreement or the Deed of Trust, or any rights or remedies granted by the Loan Documents, Lender does not waive and expressly reserves all rights and benefits now or hereafter accruing to Lender under the "security interest" or "secured creditor" exception under applicable Envirorunental Laws, as the same may be amended. No action taken by Lender pursuant to the Loan Documents or the Deed of Trust shall be deemed or construed to be a waiver or relinquishment of any such rights or benefits under the "security interest exception." This indemnification shall survive the termination of this Agreement and payment of the indebtedness hereunder.

Section 8.04. Payment of Taxes and Other Claims. Borrower will file its Form 990 and/or tax returns, as applicable, in a timely manner every year during the term of this Agreement. Borrower will pay or discharge, when due, (a) all taxes, assessments and governmental charges levied or imposed upon it or upon its income or profits, upon any properties belonging to it (including, without limitation, the Property) or upon or against the creation, perfection or continuance of the security interest created pursuant to this Agreement, prior to the date on which penalties attach thereto, (b) all federal, state and local taxes required to

4814-2985-5492.5 36

)

be withheld by it, and (c) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien or charge upon any properties of Borrower; provided, that Borrower shall not be required to pay any such tax, assessment, charge or claim whose amount, appncabifity or validity is being contested in good faith by appropriate proceedings. Borrower will pay, as the same respectively come due, all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the P~operty, as well as all gas, water, steam, electricity, heat, power, telephone, utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Property; provided, that Borrower shall not be required to pay any such tax, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings as long as it has s.et aside adequate reserves, if any, with respect thereto that, in the opinion of the Authorized Borrower Representative, are adequate and none of the Property is in danger or forfeiture.

Section 8.05. Maintenance of Property.

(a) Borrower shall, at its own expense, maintain, preserve and keep the Property and the Improvements in good repair, working order and condition, and shall from time to time make all repairs and replacements necessary to keep the Property, and the Improvements in such condition, and in compliance with state and . federal laws, ordinary wear and tear excepted.

(b) Borrower shall observe and comply with all Legal Requirements applicable to the ownership, use and operation of the Property and the Improvements. Borrower shall· maintain the Property and the Improvements in good condition and promptly repair any damage or casualty. Borrower shall permit Lender and its agents, representatives and employees, upon reasonable prior notice to Borrower, to inspect the Prope1iy and conduct such environmental and engineering studies as Lender may require, provided such inspections and studies do not materially interfere with the use and operation ofthe Property.

(c) Borrower will defend the Property against ·an claims or demands of all persons (other than Lender) claiming the Propetiy or any interest therein.

(d) Borrower will keep the Property free and clear of all security interests, liens and encumbrances except the security interest created pursuant to this Agreement, the Deed of Trust and the Permitted Encumbrances.

Section 8.06. Insurance. Borrower shall, at Borrower's own expense, obtain, maintain,. and keep in full force and effect, at all times prior to the full payment and satisfaction of all Indebtedness, insurance coverage with respect to the Property and activities conducted thereon consisting of the following.

(a) "All Risk" property and fire insurance (with extended coverage endorsement including malicious mischief and vandalism) in an amount not less than the full replacement value of the Property (with a deductible not to exceed $150,000), naming Lender under a lender's loss payee endorsement (form 438BFU or equivalent)

4814-2985-5492.5 37

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and including agreed amount, inflation guard, replacement cost and waiver of subrogation endorsements. If Borrower self-insures or adopts another alternative risk management program with respect to any pmiion of such insurance as permitted by Section 8.06(e) hereof, Borrower shall designate Lender as loss payee in a matter satisfactory to Lender; ·

(b) Comprehensive general liability insurance in an amount not less than $10,000,000.00 insuring against personal injury, death and property damage; provided, however, to the extent such comprehensive general liability insurance is provided through a program of self-insurance as provided herein, Borrower shall provide Lender with a written explanation of the terms of such coverage;

(c) Business interruption insurance covering loss of rental or other income (including all expenses payable by tenants) for up to twelve (12) months;

(d) Such other types of insurance or endorsements to existing insurance as may be reasonably required from time to time by Lender;

(e) In lieu of maintaining commercial insurance coverage, Borrower may, with the written consent of Lender, which shall not be unreasonably withheld or d~layed, adopt alternative risk management programs which the governing body of the B.orrower determines to be reasonable and which shall not have a material adverse impact on reimbursement from third-party payers, including, without limitation, to self-insure in whole or in part individually or in connection with other institutions; to participate in programs of captive insurance companies, to participate with other health care institutions in mutual or other cooperative insurance or other risk management programs, to participate in state or federal insurance programs, to take advantage of state or federal laws now or hereafter in existence limiting medical and malpractice liability, or to establish or participate in other alternative risk management programs;

(f) Other than with respect to Borrower's self-insurance or other alternative risk management programs, all of the insurance policies required hereunder shall be issued by corporate insurers licensed to do business in the· state in which the Property is located and rated A or better by A.M. Best Company, and shall be in form acceptable to

1 Lender. Should the Property be located in an area designated by the Director of the Federal Emergency Management Agency as a special flood hazard area, Borrower agrees to obtain and maintain Federal Flood Insurance, if available, within 45 days after notice is given by Lender that the Prope1iy is located in a special flood hazard area, for the full unpaid balance of the Loan and any prior liens on the Properly securing the Loan, up to the maximum policy limits set under the National Flood Insurance Program and to maintain such insurance for the term of the Loan. Certificates of all insurance required to be maintained hereunder shall be delivered to Lender contemporaneously with Borrower's execution ofthis Agreement. All such ce1iificates shall be in form acceptable to Lender and shall require the insurance company to give to Lender at least 30 days' prior written notice before canceling the policy for any reason or materially amending it. Upon the written request of Lender, certificates evidencing all renewal and substitute policies of insurance shall be delivered to Lender. If any loss shall occur at any time

4814-2985-5492.5 38

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while an Event of Default shall have occurred and be continuing, Lender shall be entitled to the benefit of all insurance polices held or maintained by Borrower, to the same extent as if same had been made payable to Lender and upon foreclosure hereunder, Lender shall become the owner thereof. Lender shall have the right, but not the obligation to make premium payments, at Borrower's expense, to prevent any cancellation,· endorsement, alteration or reissuance of any policy of insurance maintained by Borrower, and such payments shall be accepted by the insurer to prevent same;

(g) Borrower covenants and agrees that it will keep the Property, the Improvements and its other property, plant and equipment and all of its operations adequately insured at all times ai1d carry and maintain such insurance in amounts which are customarily carried, subject to customary deductibles, and against such risks as are customarily insured against by other corporations in connection with the ownership and operation of facilities of similar character and size. Borrower may maintain such insurance through one or more Borrower Affiliates; provided, that benefits payable under such policies shall be payable to BmTower or the Lender, as the case may be, under the terms of this Agreement; and

(h) Borrower shall employ and Insurance Consultant at least once every two. years to review the insurance requirements of Borrower. If the Insurance Co11,sultant makes recommendations for the increase or decrease of ~orrower' s insurance,C;e>yerage, Borrower shall increase or may decrease or shall cause to be increased or may cause to be decreased such coverage in accordance with such recommendations, subject to a good faith determination of the governing body of Borrower that such recommendations; in whole or in pmi, are in the bestinterests of Borrower.

(i) As among Lender, Borrower and Authority, Borrower assumes all risks and liabilities from any cause whatsoever, whether or not covered by insurance, for loss or damage to any portion of the Property and the Improvements or for injury to or death

·of any person or damage to any property, whether such injury or death be with respect to agents or employees of Borrower or of third parties, and whether such property damage be to Borrower's property or the property of others. Whether or not covered by insurance, Borrower hereby assumes responsibility for and agrees to reimburse Lender and Authority for and will indemnify, defend and hold Lender and Authority and any of their assignees, agents, employees, officers and directors harmless from and against all liabilities, obligations, losses, damages, penalties, claims, actions, costs and expenses (including reasonable attorneys' fees) of whatsoever kind and nature, imposed on, incurred by or asserted against Lender or Authority or their assignees, agents, employees, officers and directors that in any way relate to or arise out of this Agreement or any agreement, the transactions contemplated hereby and the Property or the Improvements, including but not limited to, (i) the selection, construction, purchase, acceptance or rejection of the Property or the Improvements or the ownership of the Property or the Improvements, (ii) the delivery, lease, possession, maintenance, use, cqndition, return or operation of the Property or the Improvements, (iii) the condition of the Property or the Improvements sold or otherwise disposed of after possession by Borrower, (iv) any patent or copyright infringement, (v) the conduct of Borrower, its officers, employees and agents, (vii) any clairh, loss, cost or expense involving alleged damage to the

48 I 4-2985-5492.5 39

environment relating to the Property or the Improvements, including, but not limited to investigation, removal, cleanup and remedial costs. All amounts payable by Borrower pursuant to the immediately preceding sentence shall be paid immediately upon demand of Authority or Lender, as the case may be. This provision shall survive the termination of this Agreement.

Section 8.07. Preservation of Existence. Subject to the provisions of Section 9.03, Borrower will preserve and maintain its existence and all of its licenses, permits, governmental approvals, rights, privileges and franchises necessary or desirable in the normal conduct of its business.; and shall conduct its business in an orderly, efficient and regular manner. Borrower will comply with the provisions of documents pursuant to which Borrower is organized and/or which govern Borrower's continued existence and with the require~ents of all laws, rules, regulations and orders of any Governmental Authority applicable to Borrower and/or its business, the violation of which would materially and adversely affect Borrower's business or its financial condition. Borrower shall hold itself out to the public as a legal entity separate and distinct from any other entity (including any affiliate thereof). So long as the Authority Note remains outstanding, Borrower will be qualified to transact business in the State. ·

Section 8.08. Performance by Lender. If Borrower at any time fails to perform or, observe any of the covenants or agreements contained in the Loan Documents, and if; ,except as otherwise provided by law, such failure shall continue for a period of 30 calendar days after Lender gives Borrower written notice thereof and Borrower is not, in the reasonable opinion of Lender, taking commercially reasonable action to remedy such failure, Lender may, but need not, perform or observe such covenant on behalf and in the name, place and stead of Borrower (or; at Lender's option, in Lender's name) and may, but need not, take any and all other actions which Lender may reasonably deem necessary to cure or correct such failure (including, without limitation, the payment of taxes, the satisfaction of security interests, liens or encumbrances, the performance of obligations owed to account debtors or other obligors, the procurement and maintenance of insurance, the execution of assignments, security agreements and financing statements, and the endorsement of instruments); and Borrower shall thereupon pay to Lender on demand the amount of all moneys expended and all costs and expenses (including reasonable attorneys' fees and legal expenses) incurred by Lender in connection with or as a result of the performance or observance of such agreements or the taking of such action by Lender, together with interest thereon from the date expended or incurred at the lesser of the Default Rate or the highest rate permitted by law. If (a) Lender reasonably determines that there is an imminent danger that its security will be materially impaired or that action is necessary to prevent future · deterioration of the Prope1iy, or (b) the failure pertains to Borrower's failure to maintain in force insurance coverage with respect to such Prope1iy as required by Section 8.06, then upon mailing of notice to Borrower, the foregoing 30 day cure period shall not be applicable. To facilitate the performance or observance by Lender of such covenants of Borrower, Borrower hereby irrevocably appoints Lender, or the delegate of Lender, acting alone, as the attorney in fact of Borrower with the right (but not the duty) from time to time to create, prepare, complete, execute, deliver, endorse or file in the name and on behalf of Borrower any and all instruments, documents, assignments, security agreements, financing statements, applications for insurance and other agreements and writings required to be obtained, executed, delivered or endorsed by Borrower under this Agreement.

4814-2985-5492.5 40

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Section 8.09. Limitations of Liability. In no event, whether as a result of breach of contract, warranty, tmi (including negligence or strict liability), indemnity or otherwise,. shall Lender, its assignees, if any, or Authority or its agents be liable for any special, consequential, inCidental, punitive or penal damages including, but not limited to, loss of profit or revenue, loss of use of the Property or the Improvements or any associated equipment, service materials or software, damage to associated equipment, service materials or software, cost of capital, cost of

. substitute property, service materials or software, facilities, services or replacement power or down time costs.

Section 8.10. Non-Liability of Authority. Authority shall not be obligated to pay the Principal, or premium, if any, or Interest on the Authority Note, except from Loan Payments: Borrower and Lender ·hereby acknowledge that Authority's sole source of moneys to repay the ·Authority Note will be provided by the payments made by the Borrower pursuant to this Agreement, and Borrower hereby agrees that if the payments to be made hereunder shall ever prove insufficient to pay all Principal, and premium, if any, and Interest on the Authority Note and any Additional Payments as the same shall become due (whether by maturity, redemption, acceleration or otherwise), then Borrower shall pay such amounts as are required from time to time to prevent any deficiency or default in the payment of such Principal, premium or Interest and any Additional Payments, including, but not limited to, any deficiency caused by acts,:. omissions, nonfeasance or malfeasance on the part ofBorrower, Authority or any third party. ·

Section 8.11. Expenses. Borrower covenants and agrees to pay, and to· indemnify Authority and Lender against, all reasonable out-of-pocket costs,. charges and expenses, including fees arid· disbursements of attorneys, accountants, consultants and other experts, incurred in good faith in connection with the Loan Documents from and after a Default.

Section 8.12. Punctual Payments. Borrower covenants and agrees to punctually pay all principa.l, interest, fees or other liabilities due under any of the Loan Documents at the times and place and in the manner specified therein.

Section 8.13. Financial Covenants. Borrower hereby further covenants to Authority and Lender that:

(a) Borro0Ver will provide copies to Lender of any compliance certificates delivered to U.S. Bank National Association (or its successor), as trustee (the "Trustee") pursuant to the Master Indenture.

(b) Borrower covenants and agrees that it will not incur any Indebtedness except as follows:

4814-2985-5492.5

(i) All Indebtedness outstanding on or before the Closing Date;

(ii) Long-Term Indebtedness, if prior to incurrence of such Long-Term Indebtedness any one of the following tlu·ee conditions is met:

(A) The Lender receives an Officer's Certi'ficate certifying that. the Debt Service Coverage Ratio, taking into account all outstanding Long-Term Indebtedness but not the Long-Term Indebtedness· to be

41

4814-2985-5492.5

incurred, for the most recent Fiscal Year for which Borrower Financial Statements are available was not less than 1.1 0; provided, however, the sum of (a) the aggregate principal amount of Long-Term Indebtedness incurred pursuant to this Section 8.13(b )(ii)(A) and then outstanding, including the Long-Term Indebtedness proposed to be incurred, and (b) the aggregate principal amount of Long-Term Indebtedness incurred pursuant to Section 8.13(b)(viii) and then outstanding, does not exceed, at the time of incurrence, 15% of the Total Revenues for the most recent Fiscal Year for which Borrower Financial Statements are available; or

(B) The Lender receives an Officer's Certificate certifying that the Debt Service Coverage Ratio, taking into account all outstanding Long-Term Indebtedness and the Long-Term Indebtedness then to be. incurred, for the most recent Fiscal Year for which Borrower Financial Statements are available, was not less than 1.20; or

(C) (1) The Lender receives an Officer's Certificate certifying that the Debt Service Coverage Ratio, taking into account all outstanding Long-Term Indebtedness, but not the Long-Term Indebtedness then to be incurred, for th~ most recent Fiscal Year for which Borrower .Financial Statements are available was not less than 1.20; and r

(2) (x) if the proposed Long-Term Indebtedness is for the financing of capital improvements, then the Lender shall have received an Independent Consultant's report (including a forecast statement of revenue and expenses for each such period, together with a statement of the relevant assumptions upon which such forecasted statements are based) indicating that the Debt Service Coverage Ratio will be at least 1.20 for each of the two respective Fiscal Years following the date . that the proposed capital improvement is expected to be in operation (an Officer's Certificate may be delivered to the Trustee in substitution for the Independent Consultant's report, provided the forecasted Debt Service Coverage Ratio for the two respective Fiscal. Years will be at least 1.75); or

(y) for all other proposed Long-Term Indebtedness, including any Guaranty, the Lender shall have received an Independent Consultant's report (including a forecast statement of revenue and expenses for each such period, together with a statement of the relevant assumptions upon which such forecasted statements are based) indicating that the Debt Service Coverage Ratio immediately after the incurrence of the prop<;>sed Long-Term Indebtedness will be at least 1.20 for the two respective Fiscal Years following the date that the Long-Term Indebtedness is incurred (an Officer's Certificate may be delivered to the Trustee in substitution for the Independent Consultant's report, provided

42

the forecasted Debt Service Coverage Ratio for the two respective Fiscal Years shall be at least 1. 75); ·

provided that the Debt Service Coverage Ratio of this subsection (C) shall be reduced, in each case, to 1.00 if the Lender receives an Independent Consultant's report indicating that Industry Restrictions or changes in public or private third-party reimbursement programs prevent Borrower from meeting the requirements of this subsection.

4814-2985-5492.5

(iii) Completion Indebtedness in an amount not to exceed 33% of the principal amount of the Indebtedness which was incurred to finance the project to be completed by such Completion Indebtedness if, prior to the incurrence of such Completion Indebtedness, there is delivered to the Lender (i) an Officer's Certificate to the effect that at the time of the original financing, the proceeds of the original financing were expected to be sufficient to finance the project and that such Completion Indebtedness is in an amount necessary to complete construction of such project and (ii) a report of an architect to the effect that the scope of the initial project has not changed other than as required by law or a governmental entity responsible for permitting such facility and that such Completion Indebtedness is necessary to complete construction of the project.

(iv) Long-Term Indebtedness for the purpose of refunding any outstanding Long-Term Indebtedness so as to render it no longer outstanding if:

(A) . the maximum annual principal (or mandatory sinking fund cir installment purchase price or lease rental or similar payments) and interest ·payments on the proposed Long-Term Indebtedness does not , exceed 11 0% of the maximum annual principal (or mandatory sinking fund or installment purchase price or lease rental or similar payments) and interest payments on the Indebtedness being refunded, or

(B) the total principal (or mandatory sinking fund or installment purchase price or lease rental or similar payments) and interest payments on the proposed Long-Term Indebtedness does not exceed 11 0%. of the total principal (or mandatory sinking fund or installment purchase price or lease rental or similar payments) and interest payments on the Indebtedness being refunded, or

(C) the requirements of Subsection 8.13(a)(B) or (C) of this Section are met.

(v) Short-Term Indebtedness provided that the aggregate principal amount of Short-Term Indebtedness incurred pursuant to this Section 4.5(b )(iv) and then outstanding, including the Short-Term Indebtedness proposed to be incurred, does not exceed, at the time of incurrence, 15% of the Total Revenues for the most recent Fiscal Year for which Borrower Financial Statements are

· available; provided, further that for a period of thirty (30) consecutive calendar days in each such Fiscal Year, the. amount of Short-Term Indebtedness

43

outstanding must be reduced to not more than 5% of the Total Revenues for the most recent Fiscal Year for which Borrower Financial Statements are available;

(vi) Nomecourse Indebtedness without limit;

(vii) Indebtedness fully subordinate, in a manner and upon terms . satisfactory to Lender in its sole discretion, to Borrower's obligations under this

Agreement or under any other Indebtedness or guaranty thereof, to Lender or an Affiliate of Lender, without limit;

(viii) Reimbursement or other repayment obligations ansmg under reimbursement or similar agreements with banks or other financial institutions relating to letters or lines of credit or other credit facilities used to secure or provide liquidity with respect to Indebtedness;

(ix) Long-Term Indebtedness consisting of liabilities under capitalized lease agreements for the lease of, or Indebtedness for money borrowed or liabilities under instruments evidencing deferred payment arrangements for the purchase of, equipment, tangible personal property or real property provided that , the . sum of (a) the aggregate principal amount of Long-Term Indebtedness · incurred pursuant to this Section 8.13(ix) and then outstanding, including the Long-Term Indebtedness proposed to be incurred, and (b) the aggregate principal amount of Long-Term Indebtedness incurred pursuant to Section 8.13(b)(i)(A) and then outstanding does not exceed, at the time of incurrence, 15% of the Total Revenues for the most recent Fiscal Year for which Borrower Financial Statements are available; or

(x) Indebtedness which is incurred to construct, renovate or ·replace any property of Borrower if federal or state agencies, authorities, officials or similar governmental bodies with jurisdiction over Borrower specifically mandate such construction, renovation or replacement as a condition to, or otherwise specifically required by law for, Borrower being able to continue to carry on such of its activities as are subject to the jurisdiction of such federal or state agency, authority, official or similar governmental body.

(xi) Indebtedness to Lender or its Affiliates.

Section 8.14. No Personal Liability. Notwithstanding anything to the contrary contained herein or in the other Loan Documents or in any other instrument or document

· executed by or on behalf of Authority in connection with this Agreement, no stipulation, covenant, agreement or obligation contained herein or therein shall be deemed orcoristrued to be a stipulation, covenant, agreement or obligation of any present or. future officer, employee or agent of Authority, or of any member, commissioner, officer, employee or agent of any successor to Authority, in any such person's individual capacity, and no such person, in an individual capacity, shall be liable personally for any breach or nonobservance of or for any failure to perform, fulfill or comply with any such stipulations, covenants, agreements or obligations, nor shall any recourse be had for the payment of the principal of, premium, if any, or

4814-2985-5492.5 44

interest on the loan from the Lender to the Authority or for any claim based thereon or on any such stipulation, covenant, agreement or obligation, against any such person, in an individual capacity, either directly or through Authority or any successor to Authority, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such person, in any individual capacity, is hereby expressly waived and released.

Section 8.15. Indemnification. Borrower releases Authority and Lender from, and covenants and agrees that neither Authority nor Lender shall be liable for, and covenants and agrees to indemnify and hold harmless Authority and Lender and their members, directors, officers, employees and agents from and against, any and all losses, claims, damages, liabilities or expenses, of every conceivable kind, character and nature whatsoever arising out of, resulting from, or in any way connected with (a) the Property or any part thereof; or (b) the loan from the Lender to the Authority or any certifications or representations of Borrower made in conneCtion

·therewith and the carrying out of any of the transactions contemplated by the Loan Documents; provided that in each case such indemnity shall not be required for damages that result from the gross negligence or willful misconduct on the part of the party seeking such indemnity. Borrower further covenants and agrees to pay or to reimburse Authority and Lender and their members, directors, officers, employees and agents for any and all reasonable out-of-pocket costs and . attorneys' fees, liabilities or expenses incurred in connection with. investigating, cl.efending against or otherwise in connection with any such losses, claims, damages, liabilities, expenses or actions, except to the extent that the same arise out of the gross negligence or willful misconduct of the party claiming such payment or reimbursement. In the event that any action or proceeding is brought against Authority's or Lender's members, directors, officers, employees or agents by reason of any such claim, the Borrower, upon notice from Authority's or Lender's members, officers, employees or agents shall resist and defend such action or proceeding and may settle such action or proceeding as long as there is no liability, cost or expense to Authority and Lender or Authority's or Lender's members, officers, employees or agents. The provisions· of this Section shall survive the payment and retirement of the loan from the Lender to the Authority and the termination of this Agreement.

Section 8.16. Covenant to Enter into Agreement or Contract to Provide Ongoing Disclosure. This Agreement is exempt from the requirements of Paragraph (b)(S)(i) of the Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (17 CFR Part 240, § 240.15c2-12) (the "Rule"). Borrower hereby covenants and agrees that if this Agreement ceases to be exempt under the Rule, Borrower will enter into an agreement or contract, constituting an undertaking, to provide ongoing disclosure as may be necessary to comply with the Rule as then in effect.

Section 8.17. Rates and Charges; Debt Coverage.

(a) Borrower covenants and agrees to fix, charge and collect, or cause to be · fixed, charged and collected, rates, fees and charges for the use of its facilities and for the services furnished or to be furnished by Borrower so that the Annual Debt Service Coverage Ratio of Borrower at the end of each Fiscal Year is not less than 1.10: 1.0.

4814-2985-5492.5 45

(b) (i) Within one hundred fifty (150) days after the end of each Fiscal Year Borrower shall compute the Annual Debt Service Coverage Ratio for such Fiscal Year and promptly furnish to the Lender an Officer's Certificate setting forth the results of such computation. Borrower covenants and agrees that if at the end of such Fiscal Year the Annual Debt Service Coverage Ratio shall have been less than 1.10: 1.0, it will promptly employ an Independent Consultant to make recommendations as to a revision of the rates, fees· and charges of Borrower or the methods of operation of Borrower to increase such ratio for subsequent Fiscal Years to the level required or, if in the opinion of the Independent Consultant, the attainment of such level is· impracticable, to the highest practicable level. Copies of the recommendations of the Independent Consultant shall be filed with the Trustee. Borrower shall, promptly upon its receipt of such recommendations, subject to applicable requirements or restrictions imposed by law, revise its rates, fees and charges or its methods of operation or collections and shall take such other action as shall be in conformity with such recommendations, subject to a good faith determination by the governing body of Borrower that the implementation of such recommendations would not be in the best interests of Borrower.

(ii) If Borrower complies in all material respects with the reasonable recommendations of the Independent Consultant in respect to said rates, fees, charges and :, methods of operation or collection, Borrower will be deemed to have complied with the covenants described under in this Section 8.17 for such Fiscal Year notwithstanding that Annual Debt Service Coverage Ratio shall be less than the level required as described in 8.17(a) above; and provided that (1) Borrower shall not be excused from taking any action or performing any duty required under the Loan Agreement and that no other Event of Default shall be waived by the operation of the provisions of this subsection (b) and (2) in all events the Annual Debt Service Coverage Ratio at the end of any Fiscal Year shall be not less than 1.0:1.0.

(c) Borrower may permit the rendering of service at, or the use of, its facilities without charge or at reduced charges, at the discretion . of the governing body of Borrower, to the extent necessary for maintaining its tax exempt status and its eligibility for grants, loans, subsidies or payments from the United States of America, any instrumentality thereof, or the State of California or any instrumentality thereof, or in compliance with any recommendation for free services that may be made by an Independent Corisultant; provided that (1) Borrower shall not be excused from taking any

· action or performing any duty required under the Loan Agreement and that no other Event of Default shall be waived by the operation ofthe provisions of this subsection (c) and (2) in all events the Annual Debt Service Coverage Ratio at the end of any Fiscal Year shall be not less than 1.0: 1.0.

Section 8.18. Tax Service Contract. Borrower shall pay to Lender, upon notice and demand, the cost of a tax service contract, which contract Lender is authorized to secure at Borrower's expense with a third-party vendor that shall provide tax information on the Property and the real property subject to the Deed of Trust.

Section 8.19. Appraisals. In addition to the Appraisal contemplated in Article III hereof, Lender may, from time to time, obtain an Appraisal of all or any part of the Property

4814-2985-5492.5 46

prepared in accordance with written instructions from Lender. The cost of any such Appraisal shall be borne by Borrower if it (i) is obtained at least twenty four (24) months after the last Appraisal of the Property, or (ii) is obtained after the occurrence of an Event of Default. If the appraisal cost is payable by Borrower, such cost shall be due and payable upon demand from Lender and shall be secured by the Loan Documents.

Section 8.20. Brokers. Borrower will indemnify Lender from claims of brokers arising by reason of the execution hereof or the consummation of the transactions contemplated hereby, where such claims arise from any action taken by Borrower or any officer, partner, employee, or representative ofthe Borrower

Section 8.21. Complia.nce with Material Agreements. Borrower shall comply in all respects with all material existing and future agreements, indentures, mortgages, or documents which are binding on it or affecting any of its properties or business.

·Section 8.22. PropertY Contracts. Within twenty (20) days after a request by Lender, Borrower shall (i) prepare and deliver to Lender a complete listing of all Property Contracts, showing the date, term, parties, subject matter, payment obligations, whether anybreach exists, and other information reasonably specified by Lender with respect to each such Property . Contract; and/or (ii) deliver to Lender a copy of each Property Contract, including (if requested by Lender) a copy of each Prope1iy Contract that is hereafter executed upon execution of each such Property Contract.

Section 8.23. Liquidity. The Borrower covenants and agrees that for so long as the .· Ambac Municipal Bond Insurance Policy is outstanding, on each January 1 and July 1, it will maintain a balance of Cash equal to 60 times a Pay of Cash Expenditures of the Borrower (the . "Liquidity Amount").

(a) Said moneys do not constitute part of the property pledged as security for purposes of the Loan Documents, and the Borrower may spend any or all of such amount for any lawful purpose.

(b)" The calculation of the Liquidity Amount for each January 1st shall be made on or before 120 days following the end of the immediately preceding Fiscal Year and such . calculation shall be done usmg the audited financial statements for such immediately preceding Fiscal Year.

· (c) The calculation of the Liquidity Amount for each July 1st shall be made on or before 60 days following each June 30th and such calculation shall be done using the unaudited financial statements for the period of January 1st through such June 30th for the Cash amount and the audited financial statements for the immediately preceding Fiscal Year for the Day of Cash Expenditures amount.

(d) The Borrower shall provide to the Lender written notice of the calculation of the Liquidity Amount on or before the date such calculation is required to be made as provided in the foregoing two paragraphs.

4814-2985-5492.5 47

(e) The Lender may declare an immediate event of default by delivery of written notice thereof to the Borrower if (i) the Borrower shall fail to deliver to the Lender any notice of the calculation of the Liquidity Amount required by the foregoing provisions of this Section 3 and fails to cure such failure within ten (1 0) business days after receipt of notice from the Lender of such failure delivered to the Borrower, the General Conference and LLUAHSC, and/or (ii) the Borrower shall fail to maintain the required Liquidity Amount on any January 1 or July 1 and fails to restore the amount of Cash on hand to at least such required Liquidity Amount prior to the next semi-annual test date (January 1 or July 1, as applicable).

ARTICLE IX

NEGATIVE COVENANTS OF BORROWER

Borrower further covenants that so long as any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Lender under any of the Loan Documents remain outstanding, and until payment in full of all obligations of Borrower subject hereto, Borrower shall, unless ,Lender otherwise expressly waives in writing, comply with the following requirements:

Section 9.01. Lien. Borrower will not create, incur or suffer to exist any mortgage, deed of trust, security interest, assignment or transfer upon the Property except for the security interest created pursuant to the Loan Documents or Permitted Encumbrances.

Section 9.02. Sale of Assets. Borrower will not sell, lease, assign, transfer or otherwise dispose of all or a substantial part of its assets (other than obsolete equipment which is promptly replaced with replacement equipment as necessary to operate its business) or any of the Property or any interest therein (whether in one transaction or in a series of transactions) without the prior written consent of Lender, which consent shall not be unreasonably withheld, and the delivery to Authority and Lender of an opinion of nationally recognized bond counsel to the effect that any such sale, lease, assignment, transfer or other disposition will not cause the interest on the Authority Note to be included in gross income of the owners thereof. Borrower shall provide Authority and Lender with prior written notice of its intention to sell, lease, assign, transfer or otherwise dispose of the Property or any interest therein and shall agree in writing to remain liable under the Loan Documents. In the event of a sale, assignment or transfer of the Property to a Borrower Affiliate, such purchaser, assignee or transferee shall assume in writing Borrower's obligations under the Loan Documents and the Authority Note and the Borrower Note shall not become due and payable.

Section 9.03. Consolidation and Merger. Borrower will not consolidate with or merge into any person, or permit any other person to merge into it, or acquire (in a transaction analogous in purpose or effect to a consolidation or merger) all or substantially all of the assets of any other person; provided, however, that Borrower may merge or consolidate with a Borrower Affiliate with the written consent of Lender (which will not be unreasonably withheld) if (a) Borrower is the surviving organization, (b) Lender and Authority shall have received prior written notice of any such merger or consolidation and an opinion of nationally recognized bond counsel acceptable to Lender and Authority, in form and substance acceptable to Lender and

4814-2985-5492.5 48

Authority, to the effect that under then existing laws the consummation of such merger, consolidation, sale or conveyance would not cause the interest under the Authority Note to become includable in gross income under the Code or adversely affect the validity of this · Agreement, (c) such merger or consolidation would not have a material adverse effect on Borrower's financial or operating condition, and (d) no Default or Event of Default exists or would result from any such merger or consolidation.

Section 9.04. Accounting. Borrower will not adopt, permit or consent to any material change in accounting principles other than as required by GAAP or adopt, permit or consent to any change in its fiscal year unless Borrower provides Lender restated financial statements in comparative form.

Section 9.05. Transfers. Borrower will not in any manner transfer any property without prior or present receipt of full and adequate consideration as reasonably determined by Borrower or replacement of such property with prope1iy of equivalent value and usefulness.

Section 9.06. Repayment of Related Party Loans. Borrower shall obtain and maintain so long as the Loan is unpaid, agreements to subordinate the repayment of any loans or advances from a Borrower Affiliate to Borrower's obligations to make Loan Payments and Additional Payments hereunder.

Section 9.07. Change of Corporate Member. Borrower shall not permit or take or cause to be taken any action which shall result in a change in the sole corporate member of Borrower without Lender's and Authority's prior written consent.

Section 9.08. Reserved.

Section 9.09. Other Defaults. Borrower will not permit any breach, default or event of default to occur beyond any applicable cure period under any note, loan agreement, indenture, lease, mortgage, contract for deed, security agreement or other contractual obligation binding upon Borrower or fail to pay or otherwise comply with any nonappealable judgment, decree, order or determination within 60 days after it becomes final. ·

Section 9.10. Use of Property.

(a) Borrower will. not install, use, operate or maintain the Property or the Improvements improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by this Agreement.

(b) Borrower shall not deviate in any material way from its present general activities.

Section 9.11. Tax Exempt Status .

. (a) Bonower shall comply with all of the provisions of the Tax Regulatory Agreement applicable to Borrower.

4814-2985-5492.5 49

(b) Borrower will not take any action that would cause the Interest to become includable in gross income of the recipient for federal income tax purposes under the Code (including, without limitation, intentional acts under Treas. Reg. § 1.148'-2( c) or deliberate action within the meaning ofTreas. Reg.§ 1.141-2(d)), and Borrower will take and will cause its officers, employees and agents to take all affirmative actions legally within its power necessary to ensure that the Interest does not become includable in gross ipcome of the recipient for federal income tax purposes under the Code (including, without limitation, the calculation and payment of any rebate required to preserve such exclusion).

Section 9.12. Maintenance of Business. Borrower shall not change its business activities in any material respect from the business activities conducted by Borrower as of the date of this Agreement.

Section 9.13. Prohibited Activities.

(a) Borrower 'shall not use any portion of the proceeds of the Loan to finance any facility, place or building used or to be used primarily for sectarian instruction or study or as a place for devotional activities or religious worship.

(b) Borrower shall not restrict the use of the Property or the Improvements on racial or religious grounds.

Section 9.14. Pledge of Assets. Borrower shall not mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or anyportion of the Property, except (a) any of the foregoing in favor of Lender, (b) which is existing as of; and disclosed to Lender in writing prior to, the date hereof or are incurred after the date of this Agreement for the purpose of securing the indebtedness permitted by Section 9.08 hereof or (c) the Permitted Encumbrances described in Exhibit E attached hereto.

Section 9.15. Use of Funds. Borrower shall not use any of the proceeds of any credit extended hereunder except for the purposes stated in this Agreement.

Section 9.16. Additional Negative Covenants. At no time shall Borrower use, maintain, operate, or occupy; or allow the use, maintenance, operation, or occupancy of, any portion of the Property or the Improvements for any purpose which (i) violates any Governmental Requirement or any Legal Requirement; (ii) in any manner may be dangerous unless safeguarded as required by law; (iii) may constitute a public or private nuisance; (iv) may make void, voidable, or cancelable or increase the premium of any insurance then in force with respect thereto; or (v) conduct business or allow the conduct of business or other activities on the Property that are not consistent with the intended uses by the Borrower as contemplated by Lender in making the Loan. At no time shall Borrower (i) enter into any transaction with any affiliate, except a transaction upon terms that are not less favorable to it than would be obtained in a transaction negotiated at arm's-length with an unrelated third party; (ii) conduct any business other than, or make any material change in the nature of, its business as carried on as of the date hereof; (iii) change its fiscal year or make any significant change in accounting treatment or reporting practices except as required by sound accounting practices consistently applied; or

4814-2985-5492.5 50

(iv) pay ·or become obligated to pay any management, leasing, brokerage or other similar fees to any person or entity unless approved by Lender, provided that Lender shall not unreasonably withhold or delay such approval.

Section 9.17. Lease or Sublease of Property. At no time shall Borrower lease or sublease any portion of the property without Lender's consent. Notwithstanding the foregoing, Borrower may lease any portion of the Property without Lender's consent to (i) any Borrower Affiliate. on any terms determined by Borrower, and (ii) to any unaffiliated third party at thencurrent fair ·market rental (including then-market rental escalation clauses) and under other

· commercially reasonable terms, so long as each such lessee executes and delivers to Borrowers a Nondisturbance, Subordination and Attornment Agreement in substantially the form attached hereto as Exhibit F. Any lease to a Borrower Affiliate at below then-current fair market rental (including then-market rental escalation clauses) or under terms that are not commercially reasonable shall include an Amendment to such Nondisturbance, Subordination and Attornment Agreement deleting the nondisturbance provisions and permitting the Lender (and any successor to the L~nder on foreclosure or deed in lieu of foreclosure) to foreclose on such Borrower Affiliate's leasehold interest and terminate such lease.

Prior to entering into any lease with a Borrower Affiliate or a third party under the tenus· of this Section, Borrower shall obtain from Lender confirmation of market rental terms, other "commercially reasonable terms" and approval of a form lease, such approval riot to be unreasonably withheld, conditioned or delayed. Market rental terms shall have been confirmed no more than twelve (12) months prior to the time any lease is entered into. In the event that Lessee and Lender disagree, fair market rental and market escalations shall be determined by a nationally recognized real estate brokerage firm selected by Lender and reasonably acceptable to Borrower. The fees and expenses charged by the broker shall be paid by Borrower. ·

Any suite or other space used by Borrower directly shall be promptly added, by amendment or supplement, to the lease between Borrower as lessor and Borrower as lessee, declared and entered into by Borrower, as part of the closing of the Loan, with respect to space occupied by Borrower.

ARTICLE X

DAMAGE AND DESTRUCTION; USE OF NET PROCEEDS; CONDEMNATION

Section 10.01. Damage, Destruction and Condemnation . of the Property; Application of Net Proceeds.

(a) If at any time prior to full payment of the Loan by Borrower, the Property or any part thereof is damaged, either temporarily or permanently, or title or use thereof or is taken by condemnation, Borrower shall be obligated to continue to pay the amounts specified herein, and the Net Proceeds will be applied as set forth in subsection (b) of this Section 10.01.

4814-2985-5492.5 51

1

.,

4814-2985-5492.5

(b) Application of Net Proceeds .

(i) General. If the cost of restoration is $500,000 or less and no Ev.ent of Default has occurred and is continuing under this Agreement, then Borrower shall restore, or replace title so taken (collectively, a "Restoration") that portion of the Property that was damaged, for which title was so taken, and may collect and apply any Net Proceeds, as long as the other applicable conditions of such restoration are met. If an Event of Default has occurred and is continuing under this Agreement or the cost of Restoration is in excess of $500,000, the Borrower, with the written consent of Lender, shall determine the application of the Net Proceeds, to one of the following purposes:

(A) to the prepayment of the Loan m accordance with the provisions hereof;

(B) to the Restoration of that portion of the Property that was damaged, and/or the acquisition by the Borrower of other land (in the case of condemnation) or the improvements, by construction or otherwise, suitable for the Borrower's operations on the Property (which land or . improvements shall be located within the geographical bound~ries and jurisdiction of the Authority and acquired by the Borrower freetand clear of liens and encumbrances, as evidenced by a mortgagee's land title insurance policy acceptable to Lender, and shall be deemed part of the Property and subject to the lien oftheDeed of Trust).

(ii) Conditions Applicable to Use of Net Proceeds if Applied to Restoration and/or Acquisition of the Property. In the event that, and to the extent that, the Borrower is to restore the Property, or acquire other property in accordance with subsection (b )(i)(B) above, the following conditions must be met and complied with:

(A) The Net Proceeds and, if deemed necessary by Lender, additional deposits made by Borrower which may be necessary in the judgment of Lender for the Restoration of the Property to its condition ·immediately prior to the damage shall be deposited with the Lender.

(B) the Borrower will proceed promptly to the Restoration of that part of the Property so damaged, or that portion of the Property

· remaining after any condemnation, to substantially the same condition as it existed prior to such damage or taking, with such changes, alterations and modifications (including the substitution and addition of other property, and in the case of condemnation, other land or improvements) as may be desired by Borrower and approved in writing by Lender and as will not impair the operating unity or productive capacity of the Property or the character of the Property under the Act.

52

4814-2985-5492.5

(C) Borrower will observe and comply with. all of the requirements of this Agreement with respect to any such improvements to, or Restoration of, the Property.

(D) Borrow~r will request disbursements from the Lender to. pay the costs of such Restoration, either on completion thereof or as the work progresses.

(E) The Net Proceeds shall be disbursed upon Borrowees request in installments and amounts determined as follows:

(1) at the time of each disbursement, no Event of Default shall have occurred and be continuing, and

(2) with respect to each disbursement and accompanying each request therefor, there shall be delivered to Lender (I) a certificate signed by an Authorized Representative of Borrower specifying in reasonable detail the items of cost to be reimbursed from the Net Proceeds and certifying that, to the best of his knowledge and belief, no Event of Default has occurred and is continuing, (II) a certificate addressed to Lender by an ~.architect, engineer or project )11anager, reasonably acceptable to Lender, supervising the restoration, reasonably acceptable to Lender, that all restoration completed to the date of such certificate has been completed in accordance with then applicable laws, ordinances and. codes, and that the amount of such disbursement, together with all other disbursements, does not exceed the aggregate amount, of all such costs incurred or paid on account of work, labor or services performed and materials installed in or stored upon the. Property at the date of such certificate, and (III) mechanics' lien waivers, if applicable, in form and substance reasonably satisfactoryto Lender certifying that all claims then existing for labor, services and materials enforceable by the creation of a lien against the Property have been pa,id in full, waived, or provided for in a manner acceptable to Lender. ·

(F) Notwithstanding the foregoing, if the cost of the restoration IS m excess of $2,000,000, only 90% of each disbursement requested under clause (E) shall be disbursed under that clause. The final 10% shall be disbursed only upon delivery to Lender, in addition to the items required by (E) above, of the following:

(1) mechanics' lien waivers in form and substance reasonably satisfactory to Lender ce1iifying that all claims then existing for labor; services and materials enforceable by the creation of a lien against the Property have been paid in full,

53

]

4814-2985-5492.5

waived, or provided for in a manner acceptable to Lender has been made therefor, and

(2) a certificate of an architect, engineer or project manager reasonably- acceptable to Lender that the restoration or acquisition of additional property has been completed in a good and workmanlike manner, in accordance with the plans and) specifications approved by any consultant retained for such purpose by the Borrower and reasonably acceptable to Lender and in accordance with all laws, rules, regulations, orders, codes and ordinances then applicable to such restoration or acquisition of additional property, and

(G) Any balance of the Net Proceeds remammg after the · . payment of all of the costs of any restoration or acquisition of additional property permitted by Subsection (b)(i)(B) above shall be returned to Borrower.

(H) Borrower shall, at its sole cost and expense, consult and retain consultants to the extent Lender deems it reasonably necessary to . determine the total costs of restoring the Property to its .•condition immediately prior to such damage.

(I) All restoration shall be conducted under the supervision of an architect, engineer, or project manager, paid for by Borrower and reasonably approved in advance in writing by Lender, and by a general contractor reasonably approved by Lender.

(J) If appropriate to the nature of the restoration, all restoration shall be performed pursuant to plans and specifications and in accordance with contracts approved in advance in writing by one or more consultants retained by the Borrower and reasonably acceptable to Lender.

(K) All moneys held by Lender shall constitute additional · collateral to secure repayment of the Loan, and the. Borrower hereby grants to Lender a security interest therein for the benefit of Lender.

(L) All r,eal and personal property acquired pursuant to this section shall become part of the Property, and following the recording of the Deed of Trust, Borrower shall take all steps necessary to subject such property to the lien and security interest of the Deed of Trust and to obtain an amendment to the mortgage title policy required by the Deed of Trust to insure title to all real prope1iy acquired pursuant to this section.

(c) General Provisions.

(i) Compromise of Losses and Claims. Borrower hereby authorizes Lender, at its option, so long as an Event of Default has occurred and is

54

continuing under this Agreement, to collect, adjust and compromise any losses or claims under the insurance policy or condemnation. So long as no Event of Default shall have occurred and be continuing; Borrower shall be entitled to adjust and compromise any losses or claims under any insurance policy or condemnation; provided, however, that any final settlement or compromise of greater than $500,000 shall be subject to Lender's prior reasonable approval.

(ii) Provisions of this Article to Govern. Borrower expressly waives any right or privilege now granted or created under the provisions of any of the real property laws of the State or any similar law now or hereafter in effect relating to the condemnation of or other damage to the Property and agrees that· the provisions of this Article shall govern in lieu thereof.

(iii) Net Proceeds to be Held in Trust. All Net Proceeds received by any person shall be held in trust by the recipient thereof to be applied in accordance with the terms of this Article. All Net Proceeds shall be invested as agreed by Borrower and Lender in such manner and subject to such conditions as, in the opinion of Bond Counsel addressed to Lender and the Authority, are necessary to preserve the exclusion of the Interest from the gross income of. Lender for purposes of federal income taxation pursuant to the Code.

(iv) Insufficient Funds; Excess Funds. In the event the Net Proceeds are not sufficient to pay in full the costs of repairing, rebuilding, altering and restoring the Property or acquiring additional property, as provided in this Section, unless Borrower prepays the Loan as set forth in Section lO.Ol(b)(i)(A), Borrower will nonetheless complete the work or the acquisition thereof and pay that pmiion of the costs thereof in excess of the amount of such Net Proceeds. Borrower shall not, by reason of the payment of such excess costs be entitled to any reimbursement for such excess costs from Lender or the Authority, or to any abatement or diminution of the payments payable hereunder. Any balance ofNet Proceeds remaining after compliance with this section shall he returned to

t

Borrower.

Section 10.02. Assignment of Condemnation Award and Title Insurance Proceeds. Borrower irrevocably assigns, transfers and sets over to Lender all of its rights to the Net Proceeds in an amount equal to the amount necessary to prepay the Loan pursuant to Section 2.08 from the taking of any part of the· Property under the exercise of the power of eminent domain or the loss thereof because of failure of title, including Net Proceeds of any title insurance. Any such proceeds shall be applied in accordance with Section 10.01 unless the Borrower elects to prepay the Loan or an Event of Default exists.

\

Section 10.03. Damage, Destruction and Condemnation of the Improvements; Application of Net Proceeds. Borrower shall provide a complete written report to Lender immediately upon any loss, theft, damage or destruction of any portion of the Improvements and of any accident involving any portion· of the Improvements. If all or any part of the Improvements are lost, stolen, destroyed or damaged beyond repair ("Damaged Property"), Bo,rrower shall as soon as practicable after such event either: (a) replace the same at Borrower's

4814-2985-5492.5 55

sole cost and expense with Improvements having substantially similar specifications and of equal or greater value to the Damaged Property immediately prior to the time of the loss occurrence, such replacement Improvements to be subject to Lender's approval, whereupon such replacement equipment shall be substituted in the related Draw Request and the other related documents by appropriate endorsement or amendment; or (b) pay the applicable Prepayment Amount of the Damaged Property. Obligor shall notify Lender of which course of action it will take within 15 calendar days after the loss occurrence. If, within 45 calendar days of the loss occurrence, (i) Borrower fails to notify Lender; (ii) Borrower and Lender fail to execute an amendment to the related Draw Request to delete the Damaged Property and add the replacement property, or (iii) Borrower fails to pay the applicable Prepayment Amount, then Lender may, at its sole discretion, declare the applicable Prepayment Amount to be immediately due and payable, and Borrower is required to pay the same. The payment of the Prepayment Amount is subject to the terms of Section 2.08 hereof.

ARTICLE XI

ASSIGNMENT, SUBLEASING AND SELLING

Section 11.01. Assignment by Lender. Subject to the conditions contained herein, this , Agreement, the Authority Note and the right to receive payments of principal of, premiqm, if any and interest on the Authority Note and Loan Payments, as assignee of Authority, direl)tly from Borrower, may be transferred, assigned and reassigned in whole or in part by Lender withoutthe consent of Authority or Borrower, to an Affiliate or Qualified Institutional Buyer so long as Borrower is required to make Loan Payments only to one party. In the event of a sale or transfer to an Affiliate, Lender shall certify to Authority and Borrower that such transferee is an Affiliate. In the event of a sale or transfer to a Qualified Institutional Buyer, Lender shall provide to Authority and Borrower a written statement of such transferee representing that such transferee is a Qualified Institutional Buyer and such transferee shall deliver to Authority and Borrower a letter of representations substantially in the form of Exhibit C hereto which shall contain a certification that the transferee is a Qualified Institutional Buyer as provided in this Agreement. Upon assignment, Borrower will reflect in a book-entry the assignee designated in the written request of assignment or in a written certification of an Affiliate delivered to Authority and Borrower pursuant to this Section, and shall agree to make all payments to the assignee designated in such written request, notwithstanding any claim, defense, setoff or counterclaim whatsoever (whether arising from a breach of this Agreement or otherwise) that Authority and Borrower may from time to time have against Lender or the assignee. Authority and Borrower agree to execute all documents, including notices of assignment and chattel mortgages or financing statements, which may be reasonably requested by Lender or its assignee to protect their interest in the Property, the Authority Note and in this Agreement. Lender or assignee shall pay all reasomible expenses of Authority, including reasonable fees and expenses of counsel, in connection with such transfer and assignment.

Section 11.02. No Sale or Assignment by Borrower. This Agreement and the interest of Borrower in the Property may not be sold, assumed, assigned or encumbered by Borrower, except for the Permitted Encumbrances other than to a Borrower Affiliate with Lender's prior written consent which will not be unreasonably withheld.

4814-2985-5492.5 56

ARTICLE XII

EVENTS OF DEFAULT AND REMEDIES

Section 12.01. Events of Default. The following constitute "Events of Default" under this Agreement:

(a) failure by, Borrower to pay to Lender, as assignee of Authority, when due any Loan Payment to be paid hereunder and the Borrower Note and the continuation of such failure for a period of seven calendar days following the applicable due date;

(b) failure of Borrower to make any other payment to Lender or Authority in accordance with the Loan Documents when the same becomes due and payable by submission of an invoice to Borrower reflecting a date on which such payment is due and payable, or by other notice to the Borrower reflecting a date on which such payment is due and payable, and the continuation of such failure for seven days following the applicable due date;

(c) the occurrence of any breach of any other covenant or other obligation _ under this Agreement ("Non-Monetary Default"), other than a breach described in Sections 12.01(a) or (b) above, and such breach remains uncured for a period of thirty (30) days after Lender gives Borrower, General Conference and LLUAHSC written notice thereof ("Notice of Non-Monetary Default"), provided, however, in the event that (a) Lender reasonably determines that there is an imminent danger that its security will be materially impaired or that action is necessary to prevent future material deterioration of the Prope1iy or (b) the Non-Monetary Default pertains to Borrower's failure to maintain in force insurance coverage with respect to such Property as may be required by Lender under the Loan Documents, then upon mailing of the Notice ofNon-Monetary Default to Borrower, the foregoing thirty (30) day cure periods shall not be applicable;

(d) abandonment by Borrower of the Property or the Improvements;

(e) an event of default (following the expiration of any cure period) under the Master Indenture or any other Indebtedness or any related security or loan agreement, including an event or event of default by any guarantor under any Guaranty between Borrower and Lender or an Affiliate;

(f) Borrower shall be or become insolvent, or admit in writing its inability to pay its debts as they mature, or make an assignment for the benefit of creditors; or Borrower shall apply for or consent to the appointment of any receiver, trustee or similar officer for it or for all or any substantial part of its property; or such receiver, trustee or similar officer shall be appointed without the application or consent of Borrower; or . Borrower shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt; dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise) against

4814-2985-5492.5 57

Borrower; or any judgment, writ, warrant of attachment or execution or similar process shall be issued or levied against a substantial part of the property of Borrower; ·

(g) determination by Lender that any representation or warranty made by. Borrower herein, in any other Loan Document or in any other document executed in connection herewith or therewith, was when made and continues to be untrue in any material respect;

·(h) a Determination of Taxability shall occur;

(i) The filing of a notice of judgment lien against Borrower, or the recording of any abstract of judgment against Borrower in any county in which Borrower has an interest in real property; or the service of a notice of levy and/or writ of attachment or execution or other like process against the assets of the Borrower; or the entry of a judgment against Borrower, in any case for an uninsured claim in excess of $500,000;

G) An "Event of Default" under any other Loan Document; or

(k) the determination by Lender in good faith that a Material Adverse Effect has occurred.

The provisions of Sections 12.01(c) and 12.01(d) are subject to the limitation that, if by reason of force majeure the Borrower is unable in whole or in part to observe and perform any of its covenants, conditions or agreements hereunder, Borrower shall not be deemed .in default under Sections 12.0l(c) or 12.0l(d) during the continuance of such inability; provided, that such period .does not exceed 60 days. The term "force majeure'' as used herein shall include without limitation acts of God, strikes, lockouts or other industrial disturbances, acts of public enemies; orders of any kind of the government of the United States of America or the State or any political subdivision thereof or any of their departments, agencies or officials, or any civil or military insurrections; riots; epidemics, landslides; lightning; earthquake; fire; hurricanes; tornadoes; storms; floods; washouts; droughts; arrests; restraint of government and people;· civil disturbances; explosions; pmiial or entire failure of utilities; or any other cause or event not insurable or reasonably within the control of Borrower. Borrower shall, however, remedy with all reasonable dispatch the cause or causes preventing Borrower from carrying out its covenants, conditions and agreements, provided that the settlement of strikes, lockouts and other industrial disturbances shall be entirely within the discretion of Borrower, and Borrower shall not be required to make settlement of strikes, lockouts and other industrial disturbances by acceding to the demands of any opposing pmiy when such course is in the reasonable judgment of Borrower unfavorable to Borrower.

Section 12.02. Remedies on Default. Upon the occurrence and continuance of any Event of Default:

(a) the Notes and all Indebtedness of Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding, shall at Lender's option upon notice to Borrower (except in the case of an Event of Default under Section 12.01(£), whereupon the Indebtedness shall become due automatically without

4814-2985-5492.5 58

notice to Borrower) become immediately due and payable without presentment, demand, protest or notice of dishonor, all of which are hereby expressly waived by Borrower;

(b) the obligation, if any, of Lender to extend any further credit under any of the Loan Documents shall immediately cease and terminate; and

(c) Lender shall have all rights, powers and remedies available under each of the Loan Documents, or accorded by law, including without limitation the right to resort to any or all security for any credit subject hereto and to exercise any or all of the rights of a beneficiary or secured party pursuant to applicable law or equity.

All rights, powers and remedies of Lender may be exercjsed at any time by Lender, as assignee of Authority, and from time to time after the occurrence and continuance of an Eventof Default, are cumulative and not exclusive, and shall be in addition to any other rights, powers or remedies provided by law or equity.

Borrower shall pay or repay to Lender and Authority all costs of such action or court ( .

action, including, without limitation, reasonable attorneys' fees. Notwithstanding any other remedy exercised hereunder, Borrower shall remain obligated to pay to Lender any unpaid portion of the Prepayment Amount.

Upon the declaration by Lender that the Loan is due and payable, the Authority Note shall concurrently b~come due and payable and shall be paid solely from amounts received under this Agreement from the exercise of remedies available to Lender.

Section 12.03. Lender's Right to Perform the Obligations. If Borrower shall fail, refuse or neglect to make any payment .or perform any act required by the Loan Documents to which it is a party, then while any Event of Default exists and is continuing, and without notice to or demand upon Borrower and without waiving or releasing any other right, remedy or r.ecourse Lender may have because of such Event of Default, Lender may (but shall not be obligated to) make such payment or perform such act for the account of and at the expense of Borrower and interest on such payment shall accumulate from the date or the advance at the Default Rate until such advance is paid, and· shall have the right to enter upon the Property and the Improvements for such purpose and to take all such action thereon and with respect to the Property and the Improvements as it may deem necessary or appropriate. If Lender shall elect to pay any sum due with reference to the Project, Lender may do so in reliance on any bill, statement or assessment procured from the appropriate Governmental Authority or other issuer thereof without inquiring into the accuracy or validity thereof. Similarly, in making any payments· to protect the security intended to be created by this Agreement and the Deed of Trust, Lender shall not be bound to inquire into the validity of any apparent or threatened adverse title, lien, encumbrance, claim or charge before making an advance for the purpose of preventing or removing the same. Additionally, if any Hazardous Materials affect or threaten to affect the Property in violation of the terms hereof, Lender may (but shall not be obligated to) give such notices and take such actions as it deems necessary or advisable in order to abate the discharge of any Hazardous Materials or remove the Hazardous· Materials. Borrower shall indemnify, defend and hold Lender and Authority harmless from and against any and all losses, liabilities, claims, damages, expenses, obligations, penalties, actions, judgments, suits, costs or disbursements of

4814-2985-5492.5 59

any kind or nature whatsoever, including reasonable attorneys' fees, incurred or accruing by reason of any acts performed by Lender pursuant to the provisions of this Section, except as a result of Lender's gross negligence or willful misconduct. The provisions of this Section shall survive the termination ofthis Agreement.

Section 12.04. No Remedy Exclusive. No remedy herein conferred upon or reserved to Lender or Authority is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement, the Borrower Note or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle Lender or Authority to exe~cise any remedy reserved to it in this Article, it shall not be necessary to give any notice other than such notice as may be required by this Article. All remedies herein conferred upon or reserved to Lender or Authority shall survive the termination of this Agreement.

Section 12.~5. Late Charge. If Borrower fails to make any Loan Payment anci such failure results in the untimely payment of principal of, premium, if any, and interest· on this Agreement and the Borrower Note, or if Borrower fails to make any Additional Payment when .· due, the Borrower shall pay to Lender a late charge equal to 5% of the past due payment.

Section 12.06. General Conference and LLUAHSC Notice and Right to Cure. The General Conference and LLUAHSC shall be given notice as described in this Section 12.06 and shall have the right, but not the obligation, to cure as more specifically set forth in this Section 12.06 to the same extent and on the same terms as the Borrower could so do. Payments made by or acts undertaken by the General Conference or LLUAHSC shall be considered as payment or performance by the Borrower and shall prevent or cure an Event of Default to the same extent payment or performance by the Borrower would prevent or cure such Event of Default.

ARTICLE XIII

MISCELLANEOUS

Section 13.01. Costs. and Expenses of Lender and Authority. Borrower shall pay to Lender and Authority, in addition to the Loan Payments payable by Borrower hereunder, such amounts in each year as shall be required by Lender or Authority in payment 9f any reasonable costs and expenses incurred by Lender and Authority in connection with the execution, performance 9r enforcement of this Agreement, including but not limited to payment of all reasonable fees, costs and expenses and all administrative costs of Lender and Authority in connection with the Property, expenses (including, without limitation, attorneys' fees and disbursements), fees of auditors or attorneys, insurance premiums not otherwise paid hereunder and all other direct and necessary administrative costs of Lender and Authority or charges required to be paid by it in order to comply with the terms of, or to enforce its rights under, the Loan Documents; provided that Borrower shall not be obligated to pay Lender's administrative costs with respect to the Loan prior to the occurrence of an Event of Default. Such costs and expenses shall be billed to Borrower by Lender or Authority, as the case may be, from time to

4814-'2985-5492.5 60

time, together with a statement certifying that the amount so billed has been paid by Lender or Authority, as the case may be, for one or more of the items above described, or that such amount

· is then payable by Lender or Authority, as the case may be, for such items. Amounts so billed shall be due and payable by Borrower within 30 days after receipt of the bill by Borrower.

Section 13.02. Disclaimer of Warranties. LENDER AND AUTHORITY MAKE NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR FITNESS FOR USE OF THE PROJECT OR ANY OTHER WARRANTY OR . REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT THERETO. In no event shall Lender or Authority be liable for any loss or damage in connection with or arising out of this Agreement, the Property or the existence, furnishing, functioning or Borrower's use of any item or products or services provided for in the Loan Documents.

Section 13.03. Notices. All notices, certificates, requests, demands and other communications provided for hereunder or under any other Loan Document shall be in writing and shall be (a) personally delivered, (b) sent by first-class United States mail, (c) sent. by overnight courier of national reputation, or (d) transmitted by telecopy, in each case addressed to the party to whom notice is being given at its address as set forth above and to LLUHASC, the General Conference and, in the case of the Lender, to Siemens Financial Services, Inc, (in each case at the address set forth below) and, if telecopied, transmitted to that party at its telecopier number set fmih above or, as to each party, at such other address or telecopier number as may hereafter be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section.

4814-2985-5492.5

General Conference General Conference of Seventh-Day Adventists 12501 Old Columbia Pike

'With a copy to:

LLUAHSC:

With a copy to:

Silver Spring, MD 20904-6600 Attention: Robert Lemmon, Treasurer

General Conference of Seventh-Day Adventists 12501 Old Columbia Pike Silver Spring, MD 20904-6600 Attention: Robert Kyte, General Counsel

Lorna Linda University Adventist Health Sciences Center 1117 5 Campus Street Lorna Linda, CA 92354 Attention: Kevin Lang, Chief Financial Officer

Office of the General Counsel Lorna Linda University Adventist Health Sciences Center 1 J 234 Anderson Street Lorna Linda, CA 92354 Attention: Kent Hansen, General Counsel

61

l I

Siemens Financial Services, Inc: Siemens Financial Services, Inc.

170 Wood Avenue South Iselin, NJ 08830

All such notices, requests, demands and other communications shall be deemed to have been given on (i) the date received if personally delivered, (ii) three days after being deposited in the mail if delivered by mail, (iii) the next Business Day after the date sent if sent by overnight courier, or (iv) the date of transmission if delivered by telecopy. If notice to Borrower of any intended disposition of the Property or any other intended action is required by law in a particular instance, such notice shall be deemed commercially reasonable if given (in the manner specified in this Section) at least 10 calendar days prior to the date of intended disposition or other action.

Section 13.04. Further Assurance and Corrective Instruments. The parties hereto hereby agree that they will, from time to time, execute, acknowledge and deliver, or cause to be eX,ecuted, acknowledged and delivered, such further acts, instruments, conveyances, transfers and assurances, as any of them reasonably deems necessary or advisable for the implementation, , correction, confirmation or perfection of this Agreement, the Deed of Trust or , the Tax Regulatory Agreement and any rights of such party hereunder or thereunder.

Section 13.05. Binding Effect; Time of the Essence. This Agreement shall inure to the benefit of and shall- be binding upon Lender, Authority, Borrower and their respective successors and assigns. Time is ofthe essence.

Sectimi 13.06. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

Section 13.07. Amendments. To the extent permitted by law, the terms of this Agreement and the Borrower Note shall not be waived, altered, modified, supplemented or amended in any manner whatsoever except by written instrument signed by the 'parties hereto, and then such waiver, consent, modification or change shall be effective only in the specific instance and for the specific purpose given.

Borrower, Authority and Lender hereby agree that Borrower and Lender may amend the covenants contained in Sections 8.13, 8.17, 9. 04, 9. 06, 9.14 and 9.17 to this Agreement without the consent of Authority. Such amendment shall be effected by written instrument signed by Borrower and Lender, with written notice provided to Authority. Authority's agreement to the amendment referred to in this paragraph shall not be required.

Section 13.08. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrumerit, and any of the pmiies hereto may execute this Agreement by signing any such counterpart.

4814-2985-5492.5 62

Section 13.09. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State. Authority, Borrower and Lender each agree that any legal action or proceeding by or against Authority, shall be brought and maintained in a State court located in the County of Sacramento. By execution of this Agreement, Borrower and Lender each accept, for itself and in respect of its property, generally and unconditionally, the nonexclusive jurisdiction of the aforementioned courts. Authority, Borrower and Lender hereby waive any right to stay or dismiss any action or proceeding to which Authority is a party under or in connection with this Agreement or the Notes brought before the foregoing courts on the basis of forum non-conveniens. Authority, in its sole discretion, may waive t~e foregoing venue requirement.

Section 13.10. Captions. The captions or headings in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement.

Section 13.11. Entire Agreement. The Loan Documents and the exhibits hereto and thereto constitute the entire agreement among Lender, Authority and Borrower. ·There are no understandings, agreements, representations or warranties, express or implied, not specified herein or in such documents regarding this Agree.ment, the Property financed hereby.

Section 13.12. Usury. It is the intention of the parties hereto to comply with any applicable usury laws; accordingly, it is agreed that, notwithstanding any provisions to the contrary in this Agreement, the Authority Note or the Borrower Note, in no event shall this Agreement require the payment or permit the collection of interest or any amount in the nature of interest or fees in excess of the maximum permitted by applicable law.

Section 13.13. Waiver of Jury Trial. LENDER AND BORROWER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS AGREEMENT, ANY OF THE. RELATED DOCUMENTS, ANY DEALINGS BETWEEN LENDER OR ·BORROWER RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED· BY THIS AGREEMENT OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LENDER AND BORROWER. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS): THIS WAIVER Is· IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY RELATED TRANSACTIONS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

4814-2985-5492.5 63

Section 13.14. No Third Party Beneficiaries. This Agreement is made and entered into for the sole protection and benefit of the parties hereto, the General Conference, LLUAHSC and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents to which it is not a party.

[Remainder of Page Intentiomi.lly Blank; Execution Page Follows.]

4814-2985-5492.5 64

IN WITNESS WHEREOF, the parties hereto have executed this Agreement in their respective corporate names by their duly authorized officers, all as of the date first written above.

Lender:

Authority:

Attest:

SIEMENS PJBL;.f· INC.

By ' A{)\_ ~thorized OD'nqlas R. Ahrens

· (7-. ,. 1 r.. , . Vice President By~~~

Authorized Officer Christine M. Olenik

Vice President


. By ________________________ __

Wayne Schell, Chair

By __________________________ __ Gurbax Sahota, Assistant Secretary

Borrower: LOMA LINDA UNIVERSITY MEDICAL CENTER

By ____________________________ ___

Ruthita J. Pike Chief Executive Officer

By ____________________________ ~--


[EXECUTION PAGE OF LOAN AGREEMENT]

i I

IN WITNESS WHEREOF, the parties hereto have executed this Agreement in their respective corporate names by their duly authorized officers, all as of the date first written .above.

Lender:

Authority:

Attest:

Borrower:

SIEMENS PUBLIC, INC.

By ________________________ __

Authorized Officer

By ________________________ __

Authorized Officer


By~~~· ,:::'---'f--+---"-~7------


By ____________________ ~----------Ruthita J. Fike Chief Executive Officer

By ______________________________ __



IN WITNESS WHEREOF, the parties hereto have executed this Agreement in their respective corporate names by their duly authorized officers, all as of the date first written above.

Lender:

Authority:

Attest:


By ________________________ __

Authorized Officer

By __________________________ __

Authorized Officer


By ________________________ __

Wayne Schell, Chair

By ________________________ _

Gurbax Sahota, Assistant Secretary

Borrower: LOMA LINDA UNIVERSITY MEDICAL CENTER

By ~~=-=-=-==-<--G:::~J-k'-"""-"-. _

RuthitaJ. Fik; V Chief Executive Officer


EXHIBIT A

SCHEDULE OF PRINCIPAL PAYMENTS

Prepayment Date Pa~ment Interest Princi~al Balance Provision

Loan 12/22/2009 8,500,000.00 1 1/22/2010 88,092.65 31,875.00 56,217.65 8,443,782.35 N/A 2 2/22/2010 88,092.65 31,664.18 56,428.47 8,387,353.88 N/A 3· 3/22/2010 88,092.65 31,452.58 56,640.07 8,330,713.81 N/A 4 4/22/2010 88,092.65 31,240.18 56,852.47 8,273,861.34 N/A · 5 5/22/2010 88,092.65 31,026.98 57,065.67 8,216,795.67 N/A 6 6/22/2010 88,092.65 30,812.98 57,279.67 . 8,159,516.00 N/A 7 7/22/2010 88,092.65 30,598.19 57,494.46 8,102,021.54 N/A 8 8/22/2010 88,092.65 30,382.58 57,710.07 8,044,311.47 N/A 9 9/22/2010 88,092.65 30,166.17 57,926.48 7,986,384.99 N/A

10 10/22/2010 88,092.65 29;948.94 58,143.71 7,928,241.28 N/A 11 11/22/2010 88,092.65 29,730.90 58,361.75 7,869,879.53 N/A · 12 12/22/2010 88,092.65 29,512.05 58,580.60 7,811,298.93 N/A

13* . 1/22/2011 88,092.65 29,292.37 58,800.28 7, 752,498.65 7,907,548.62 14 2/22/2011 88,092.65 29,071.87 59,020.78 7,693,477.87 7,847,347.43 15 3/22/2011 88,092.65 28,850.54 59,242.11 7,634,235.76 7,786,920.48 16 4/22/2011 88,092.65 28,628.38 59,464.27 7,574,771.49 7,726,266.92

17 5/22/2011 88,092.65 28,405.39 59,687.26 7,515,084.23 7,665,385.91 18 6/22/2011 88,092.65 28,181.57 59,911.08 7,455,173.15 7,604,276.61

19 7/22/2011 88,092.65 27,956.90 . 60,135.75 7,395,037.40 7,542,938.15 20 8/22/2011 88,092.65 27,731.39 60,361.26 7,334,676.14 7,481,369.66 21 9/22/2011 88,092~65 27,505.04 60,587.61 7,274,088.53 7,419,570.30 22 10/22/2011 88,092.65 27,277.83 60,814.82 7,213,273.71 7,357,539.18 23 11/22/2011 88,092.65 27,049.78 61,042.87 7,152,230.84 7,295,275.46 24 12/22/2011 88,092.65 26,820.87 61,271.78 7,090,959.06 7,232,778.24 2.5 1/22/2012 88,092.65 26,591.10 61,501.55 7,029,457.51 7,170,046.66 26 2/22/2012 88,092.65 26,360.47 61,732.18 6,967,725.33 7,107,079.84 27 3/22/2012

•.___ 88,092.65 26,128.97 61,963.68 6,905,761.65 7,043,876.88

28 4/22/2012 88;092.65 25,896.61 . 62,196.04 6,843,565.61 6,980,436.92 29 5/22/2012 88,092.65 25,663.37 62,429.28 6,781,136.33 6,916,759.06 30 6/22/2012 88,0~2.65 25,429.26 62,663.39 6,718,472.94 6,852,842.40 31 7/22/2012 88,092.65 25,194.27 62,898.38 6,655,574.56 6,788,686.05 32 8/22/2012 88,092.65 24,958.40 63,134.25 6,592,440.31 6,724,289.12 33 9/22/2012 88,092.65 24,721 ~65 63,371.00 6,529,069.31 6,659,650. 70 34 10/22/2012 88,092.65 24,484.01 63,608.64 6,465,460.67 6,594,769.88 35 11/22/2012 88,092.65 24,245.48 63,847.17 6,401 ,613.50 6,529,645. 77 36 12/22/2012 88,092.65 24,006.05 64,086.60 6,337,526.90 6,464,277.44 37 1/22/2013 88,092.65 23,765.73 64,326.92 . 6,273,199.98 6,398,663.98

4814-2985-5492.5

38 2/22/2013 88,092.65 23,524.50 64,568.15 . 6,208,631.83 6,332,804.47

39 3/22/2013 88,092.65 23,282.37 64,810.28 6,143,821.55 6,266,697.98

40 4/22/2013 88,092.65 23,039.33 . 65,053.32 6,078,768.23 6,200,343.59

41 5/22/2013 88,092.65 22,795.38 65,297.27 6,013,470.96 6, 133,7 40.38

42 6/22/2013 88,092.65 22,550.52 65,542.13 5,947,928.83 6,066,887.41

43 7/22/2013 88,092.65 22,304.73 65,787.92 5,882,140.91 5,999,783.73

44 8/22/2013 88,092.65 22,058.03 66,034.62 5,816,106.29 5,932,428.42

45 9/22/2013 88,092.65 21,810.40 66,282.25 5,749,824.04 5,864,820.52

46 10/22/2013 88,092.65 21,561.84 66,530.81 5,683,293.23 5, 796,959.09

47 11/22/2013 88,092.65 21,312.35 66;780.30 5,616,512.93 5,728,843.19

48 12/22/2013 88,092.65 21,061.92 67,030.73 ,5,549,482.20 5,660,471.84

49 1/22/2014 88,092.65 20,810.56 67,282.09 5,482,200.11 5,591,844.11

50 2/22/2014 88,092.65 20,558.25 67,534.40 5,414,665.71 5,522,959.02

51 3/22/2014 88,092.65 20,305.00 67,787.65 5,346,878.06 5,453,815.62

52 4/22/2014 88,092.65 20,050.79. 68,041.86 5,278,836.20 5,384,412.92

53 5/22/2014 88,092.65 19,795.64 68,297.01 5,210,539.19 5,314,749.97

54 6/22/2014 88,092.65 19,539.52 68,553.13 5,141,986.06 .5,244,825.78

55 7/22/2014 88,092.65 19,282.45 68,810.20 5,073,175.86 . 5,174,639.38

56 8/22/2014 88,092.65 . 19,024.41 69,068.24 5,004,107.62 :· 5,104,189.77

57 9/22/2014 88,092.65 18,765.40 69,327.25 4,934,780.37/ 5,033,475.98

58 10/22/2014 88,092.65 18,505.43 69,587.22 4,865,193.15 4,962,497.01

59 11/22/2014 88,092.65 18,244.47 69,848.18 4,795,344.97 . 4,891,251.87

60 12/22/2014 88,092.65 17,982.54 70,110.11 4, 725,234.86 4,819,739.56

61 1/22/2015 88,092.65 17,719.63 70,373.02 4,654,861.84 4,747,959.08

62 2/22/2015 88,092.65 17,455.73 70,636.92 4,584,224.92 4,675,909.42

63 3/22/2015 88,092.65 17,190.84 70,901.81 4,513,323.11 4,603,589.57

64 4/22/2015 88,092.65 16,924.96 71 '167.69 4,442,155.42 4,530,998.53

65 5/22/2015 88,092.65 16,658.08 71,434.57 4,370,720.85 4,458,135.27

66 6/22/2015 88,092.65 16,390.20 71,702.45 . 4,299,018.40 4,384,998.77

67 7/22/2015 88,092.65 16,121.32 71,971.33 4,227,047.07 4,311,588.01 68. 8/22/2015 88,092.65 15,851.43 72,241.22 4,154,805.85 4,237,901.97

69 9/22/2015 88,092.65 15,580.52 72,512.13 4,082,293.72 4,163,939.59

70 10/22/2015 88,092.65 15,308.60 72,784.05 4,009,509.67 4,089,699.86

71 11/22/2015 88,092.65 15,035.66 73,056.99 3,936,452.68 4,015,181.73

72 12/22/2015 88,092.65 14,761.70 73,330.95 3,863,121.73 . 3,940,384.16

73 1/22/2016 88,092.65 14,486.71 73,605.94 3,789,515.79 3,865,306.11

74 2/22/2016 88,092.65 14,210.68 73,881.97 3,715,633.82 3,789,946.50

75 3/22/2016 88,092.65 13,933.63 74,159.02 3,641,474.80 3,714,304.30

76 4/22/2016 88,092.65 13,655.53 74,437.12 3,567,037.68 3,638,378.43

77 5/22/2016 88,092.65 13,376.39 74,716.26 3,492,321.42 3,562,167.85

78 6/22/2016 88,092.65 13,096.21 74,996.44 3,417,324.98 3,485,671.48

79 7/22/2016 88,092.65 12,814.97 75,277.68 3,342,047.30 3,408,888.25

80 8/22/2016 88,092.65 12,532.68 75,559.97 3,266,487:33 3,331,817.08

81 9/22/2016 88,092.65 12,249.33 75,843.32 3,190,644.01 3,254,456.89

82 10/22/2016 88,092.65 11,964.92 76,127.73 3,114,516.28 3,176,806.61

4814-2985-5492.5 A-2

l ~

~ 83 11/22/2016 88,092.65 11,679.44 76,413.21 3,038,103.07 3,098,865.13

84 12/22/2016 . 88,092.65 11,392.89 76,699.76 2,961,403.31 3,020,631.38

85 1/22/2017 88,092.65 11 '105.26 76,987.39 2,884,415.92 2,942,104.24

86 2/22/2017 88,092.65 10,816.56 77,276.09 2,807,139.83 2,863,282.63

87 3/22/2017 88,092.65 10,526.77 77,565.88 2,729,573.95 2, 784,165.43

88 4/22/2017 . 88,092.65 10,235.90 77,856.75 2,651,717.20 2,704,751.54

89 5/22/2017 88,092.65 9,943.94 78,148.71 2,573,568.49 2,625,039.86

90 6/22/2017 88,092.65 9,650.88 78,441.77 2,495, 126.72 2,545,029.25

91 7/22/2017 88,092.65 9,356.73 78,735.92 2,416,390.80 2,464,718.62

92 8/22/2017 88,092.65· 9,061.47 79,031.18 2,337,359.62 2,384,106.81

93 9/22/2017 88,092.65 8,765.10 79,327.55 2,258,032.07 2,303,192.71

94 10/22/2017 88,092.65 8,467.62 79,625.03 2,178,407.04 2,221 ,975.18

95 11/22/2017 88,092.65 8,169.03 79,923.62 2,098,483.42 2,140,453.09

96 12/22/2017 88,092.65 7,869.31 80,223.34 2,018,260.08. 2,058,625.28

97 1/22/2018 88,092.65 7,568.48 80,524.17 1,937,735.91 1 ,976,490.63

98 2/22/2018 88,092.65 7,266.51 80,826.14 1,856,909.77 1,894,047.97

99 3/22/2018 88,092.65 6,963.41 81,129.24 1,775,780.53 \ 1,811,296.14

100 4/22/2018 . 88,092.65 6,659.18 81,433.47 1,694,347.06 1 ,728,234;00

101 5/22/2018 . 88,092.65 6,353.80 81,738.85 1,612,608.21 •' 1 ,644,860.37

102 6/22/2018 88,092.65 6,047.28 82,045.37 1,530,562.84' 1,561,174.10

103 7/22/2018 88,092.65 5,739.61 82,353.04 1,448,209.80 1,477,174.00

104 8/22/2018 88,092.65 5,430.79 82,661.86 1,365,547.94 1,392,858.90

105 9/22/2018 88,092.65' 5,120.80 82,971.85 1,282,576.09 1,308,227.61

106 10/22/2018 88,092.65 4,809.66 83,282.99 1,199,293.10 1 ,223,278.96

107 11/22/2018 88,092.65 4,497.35 83,595.30 1,115,697.80 1,138,011.76

108 12/22/2018 88,092.65 4,183.87 83,908.78 1,031,789.02 1,052,424.80

109 1/22/2019 88,092.65 3,869.21 84,223.44 947,565.58 966,516.89

110 2/22/2019 88,092.65 3,553.37 84,539.28 863,026.30 880,286.83

111 3/22/2019 88,092.65 3,236.35 84,856.30 778,170.00 793,733.40

112 4/22/2019 88,092.65 2,918.14 85,174.51 692,995.49 706,855.40

113 5/22/2019 88,092.65 2,598.73 85,493.92 607,501.57 619,651.60

114 6/22/2019 88,092.65 2,278.13 85,814.52 521,687.05 532,120.79

115 7/22/2019 88,092.65 1,956.33 .86, 136.32 435,550.73 444,261.74

116 8/22/2019 88,092.65 ·1 ,633.32 86,459.33 349,091.40 356,073.23

117 9/22/2019 88,092~65 1,309.09 86,783.56 262,307.84 267,554.00

118 10/22/2019 88,092.65 983.65 87,109.00 .175,198.84 178,702.82

119 11/22/2019 88,092.65 657.00 87,435.65 87,763.19 89,518.45

120 12/22/2019 88,092.65 329.46 87,763.19 . 0.00 0.00

Grand Totals 10,571 '118.00 2,071,118.00 8,500,000.00

4814-2985-5492.5 A-3

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EXHIBITB

FORM OF OPINION OF COUNSEL TO BORROWER

[See Attached]

4814-2985-5492.5

December LJ, 2009

Siemens Public, Inc. 13411 Silverside Road Hornby Building, Suite 1 00 Wilmington, Delaware 19810

·Attn:

California Enterprise Development Authority 550 Berctit Drive, Suite G Sacramento, C::alifornia 95814 Attention: Executive Director

Kutak Rock LLP 515 S. Figueroa St., Ste. 1240 Los Angeles CA 90071

Re: Loan Agreement, dated as of December I, 2009, among Siemens Public, Inc., and California Enterprise Development Authority, and Lorna Linda University Medical Center

Ladies and Gentleman:

We have acted as legal counsel to Loma Linda University Medical Center (the "Borrower") in connection with that certain Loan Agreement, dated as of December I, 2009 (the "Loan Agreement"), among Siemens Public, Inc. (the "Lender"), California Enterprise Development Authority (the "Authority"), and Borrower. This opinion is furnished to the Lender and the Authority pursuant to A1ticle III, Section (r) of the Loan Agreement. Unless otherwise defined herein, the capitalized terms used in this opinion have the meanings given to them in the Loan Agreement.

In connection with the transactions contemplated by the Loan Agreement, we understand the following: .~··

The Loan Agreement will be entered into in connection with the issuance and delivery of that certain Note, executed by the Borrower as of December 1, 2009 (the "Note"), in the stated principal amount of$8,500,000 evidencing the obligation of the Borrower to make Loan Payments. The Borrower will apply the proceeds of the Note to the (i) acquisition of certain real prope1ty commonly known as the Pro Plaza Building located at 25455 Barton Road, Lorna Linda, California 92354 and of certain capital improvements to be financed from time to time with proceeds of the Loan and acquired, constructed or installed on Borrower's facilities located at 11234 Anderson Street, 25333 Barton Road, 25455 Barton Road, 11406 Loma Linda Drive, 11370 Anderson Street, and 11375 Anderson Street, Lorna Linda, California, 26780 Bmton Road, 1686 Barton Road, 1690 Barton Road, and 1710 Barton Road, Redlands, California and 900 East Washington Street, Colton, California; and (ii) financing and refinancing of same, including payment of certain costs of issuance, by obtaining a tax-exempt loan from the Lender.

To secure the Note, the Authority will assign to the Lender its right to receive payments from the Borrower and the Borrower will make payments directly to the Lender. As security for the payment of the BmTower's obligations under the Loan Agreement, the Borrower wi II enter into that certain Deed of Trust with Assignment of Rents, Security Agreement, and Financing Statement, dated as of December 1, 2009 (the "Deed of Trust"), in favor of the Authority and Lender, and the Authority will assign its interest in the Deed of Trust to the Lender.

1. Documents. For purposes of rendering the opinions expressed in Section 4 below, we have relied solely upon our examination of the originals, or copies identified to our satisfaction as being true copies, of the following documents:

4814-2985-5492.5

I I I

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1.1 Borrower Agreements.

(a) An executed copy of the Loan Agreement;

(b) An executed copy of the Deed of Trust;

(c) An executed copy of the Note;

(d) An executed copy of that certain Tax Regulatory Agreement, dated as of Debember I, 2009 (the "Tax Agreement"), between the Authority and the Borrower; and

(e) An executed copy of that certain Escrow Agreement (the "Escrow Agreement"), dated as of December 1, 2009, by and among the Lender, Borrower and Lorna Linda University, as escrow agent (the "Escrow Agent").

1.2 Entity Documents.

(a) A copy of the Articles oflncorporation ofthe Borrower, as amended, certified as true and correct by the Secretary of State of the State of California on November 17, 2009, and by an officer of the Borrower as of the date of this opinion letter; ·

(b) A Certificate of Status ofthe Borrower as a domestic corporation issued by the Secretary of State of the State of California on November 17, 2009;

(c) A Jetter of good standing for the Borrower as an exempt organization from the Franchise Tax Board ofthe State of California, dated November 10, 2009;

(d) The Bylaws of the Borrower, as amended to date, certified as true and correct by an officer of the Borrower as of the date ofthis opinion letter;

(e) A group exemption letter from the Internal Revenue Service to the General Conference of Seventh-day Adventists dated January 6, 1950; the most recent Online Version of Publication 78; and the 2009 · Seventh-day Adventist Online Yearbook (collectively the "Borrower IRS Determination");

(f) Copies of the Borrower Material Contracts·(as defined in Section 1.3(h) below), represented to us by the Borrower as being true and complete copies. ·

·(g) Resolutions relating to the transaction herein ·referred to, including (i) a resolution adopted by the Board of Trustees of the Bon·ower at a meeting held on August 25, 2009, and (ii) a resolution adopted by the Board of Trustees of the Lorna Linda University Adventist Health Sciences Center at a meeting held on August 25, 2009;

1.3 Officers' Certificates.

(a) Certificate Regarding Authorization, Incumbency and Signature of the Borrower, dated December_, 2009, attaching the Atticles oflncorporation, the Bylaws, and cettain resolutions;

(b) Certificate Regarding Insurance and Material Litigation of the Borrower, dated December_, 2009, executed by the Risk Manager of Borrower;

(c) Certificate of Tax-Exempt Status. of the BoJTower, dated December_, 2009, attaching evidence ofthe Bon·ower's status as a corporation described in Section 501(c)(3) ofthe Internal Revenue Code, 1986, as amended, an9 certifying as to certain factual matters with respect thereto;

4814-2985-5492. 5 B-2

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(d) Certificate of Officer of Borrower, dated December_, 2009, attesting to policies and practices of the Borrower as a religious nonprofit tax-exe,mpt corporation and teaching hospital;

(e) Certificate of Officer of Borrower, dated December_, 2009 certifying that the services rendered by Borrower in its facilities will be made available to all persons residing or employed in the area served by Borrower's facilities;

(f) Certificate Regarding Hazardous Materials and Bio-medical Waste ofthe Borrower, dated December_, 2009, identifying policies of Borrower regarding hazardous and bio-medical waste, and certifying compliance with such policies at the facilities of Borrower; ·

(g) Certificate of Officer of Borrower- Compliance with Additional Indebtedness Test (Debt Service Coverage Ratio), dated December_, 2009, certifying that the Borrower meets applicable requirements of Section 3.05, entitled "Limitations on Additional Indebtedness," of that certain Master Trust Indenture, dated October 26, 2005 (the "Master Trust Indenture");

(h) Ce1tificate of Officer of Borrower- Compliance with Additional Indebtedness Test (Debt· to Capital Ratio), dated December_, 2009, ce1tifying that the Borrower meets the applicable requirements of Section 10, entitled "Limitations on Additional Indebtedness," of Exhibit A to that ce1tain Supplemental Master Indenture for Obligation No. I to the Master Indenture of Trust, and attaching the report of independent consultant certifying the Borrower meets such applicable requirement's;

(i) Certificate Regarding Permitted Encumbrances, Material Contracts and Health .Planning Approvals or'the Borrower, dated as of December_, 2009, containing, among other things, a list of allll'lortgages, indentures, deeds of trust and other indebtedness and agreements, by which the Borrower is bound and which have been identified to us by the Borrower as material (the "Material Contracts");

U) Copies of the 2007 and 2008 Forms 990s ofthe Borrower and copies of three (3) years of minutes ofthe Board ofTrustees cifthe Borrower.

(

2. Certain Defined Te1ms.

2.1 For purposes of this opinion, documents referred to in Section 1.1 shall be referred to collectively as the "Borrower.Agreements."

2.2 For purposes of this opinion, documents referred to in Section 1.2 shall be referred to collectively as the "Entity Documents."

2.3 For purposes of this opinion, the documents refeJTed to in Section 1.3 shall be referred to as the "Officers' Certificates."

3. General Assumptions; Scope of Opinion.

3.1 In our examination ofthe Borrower Agreements, Officers' Certificates, and the Entity Documents, we have assumed the following:

(a) the conformity to the originals of all documents submitted to us as copies, the conformity to the final documents of all documents submitted to us in draft form, and the authenticity of all documents submitted to us as originals;

(b) that none of the aforesaid documents have been subsequently modified or terminated and that there are no agreements, written or oral, among any of the parties to such documents that modify, waive, amend or affect the terms of any such documents; and that none of the rights or obligations under any such documents have been waived or released;

4814-2985-5492. 5 B-3

(c) except with respect to the Borrower (and any person executing any of the Borrower Agreements on behalf of the Borrower), that each of the parties to the Borrower Agreements has duly and validly executed and delivered each ofthe Borrower Agreements and such party's obligations set forth in the Borrower Agreements are its legal, valid, and binding obligations, enforceable in accordance with their respective terms and, without limiting the foregoing, each such party has complied with all laws, rules or regulations necessary to enter into the Borrower Agreements, to perform their obligations pursuant thereto and to derive the intended benefits thereof and each such party has obtained or made all governmental permits, consents, approvals, authorizations, registrations, declarations, filings or licenses required to be made by or obtained by it in connection with the transactions contemplated by the Borrower Agreements;

(d) that each person, other than the Borrower (or any person executing any of the Borrower Agreements on behalf of the Bon·ower), executing any of the documents, whether individually or on behalf of an entity, is duly authorized to do so;

(e) that all signatures on documents are genuine;

(f) that any obligations of parties other than the Borrower will be timely performed by the parties to perfmm the same (except to the extent timely performance is lawfully excused); and

(g) that the rights and remedies set forth in the Borrower Agreements will be exercised by the parties thereto in a commercially reasonable manner, and each of the parties thereto will abide by the implied covenant of good faith and fair dealing imposed by California law.

3.2 · To render this opinion, we have made only the investigations described expressly herein. Except as otherwise expressly described herein, we have not independently verified factual information obtained from others including, without limitation, information contained in the Officers' Cettificates (including the Forms 990s and copies of minutes referenced therein), and we expressly disclaim any obligation to do so. We have not made any further investigation or inquiry into the factual matters described therein, whether or not of public record or contained in our files. For the factual predicates for the opinions stated herein, except as otherwise expressly set forth herein, we have relied solely, without further inquiry, and with your permission, on (i) the current actual knowledge of the attorneys in this finn and (ii) the representations contained in the Officers' Certificates.

3.3 Matters stated herein to be "to our knowledge," "based solely upon our knowledge," "identified to us by the Borrower" shall refer to the current actual knowledge as of the date of this opinion of the attorneys in this. firm without investigation or inquiry by such attorneys of any nature and shall not be deemed to include matters which could or should be known to such persons upon a review of their files or other items in their possession but not cunently known to them as of the date of this opinion.

3.4 We have prepared the Officers' Cettificatesreferenced in Section 1.3 for purposes of rendering this opinion. In preparing each Officer's Cettificate, we have conducted discussions with certain officers and employees of the Bonower, and we have asked such questions as we deemed necessary or appropriate to elicit the· facts as described in the applicable Officer's Cettificate. To the extent we are relying on the representations and WatTanties of the Bonower and of the parties contained in the Bonower Agreements in rendering this opinion, we have no cunent actual knowledge that such representations are false; however, we have not undertaken any special investigation other than that described herein of the facts to which such representations relate and we do not undertake any obligation to do so. ·

3.5 Our opinions expressed below as to compliance with certain laws, statutes, rules and regulations are based .upon those California and federal laws, statutes, rules and regulations which in our experience are normally applicable to financing transactions of the type contemplated by the Bonower Agreements, and specifically do not include, without limitation, any review of laws, statutes, rules or regulations pertaining to securities law, tax Jaw (other than the tax Jaw applicable to the tax-exempt status of the Borrower), labor Jaw, environmental law or Jaws pertaining to federal and state healthcare reimbursement programs such as Medicare and Medi-Cal, including without limitation those laws commonly refetTed to as the Stark Law, the Speier Law, or federal and state anti-kickback laws.

4814-2985-5492. 5 B-4

3.6 Where we opine as to Material Contracts, we refer to those contracts identified to us as material by the Borrower in the Officers' Certificates. To the extent that any of the Material Contracts is, or purports to be, governed by the laws of any jurisdiction other than the State of California, our opinion relating to such contracts is based solely upon interpretation or construction in accordance with California Jaw without regard to the principles of conflicts of law. We have not made any further investigation or inquiry into the nature of the contractual obligations of the Borrower and furthermore, we have not considered, and we express no opinion on the effect of (i) financial calculations or determinations necessary to asce1tain compliance with financial or similar covenants, or (ii) provisions relating to the occurrence of a "material adverse change," or "material adverse effect" or words of similar import contained in any such document.

\

3.7 We express no opinion as to the effectiveness or enforceability of any documents or instruments other than as expressly described herein, nor do we opine with respect to any future modifications, amendments or additional documents or instruments that may be entered into by or among the parties to this transaction.

3.8 Where we opine as to the performance by the Borrower of its obligations under the Borrower Agreements, or any of them, we refer solely to the obligations of the Borrower for the borrowing and repayment of monies, the granting of liens, the protection of liens and collateral, and the related obligations which are fundamental or essential to the performance of said primary obligations.

3.9 In rendering this opinion, we have assumed that: (i) none of the Property (as. defined in the Deed of Trust) will consist of consumer goods, farm products, farm equipment, crops (growing or to be grown), timber or materials and the like (including oil and gas) or accounts resulting from the sale thereof or beneficial interest in a trust's or a decedent's estate; (ii) that the Borrower has "rights" in the Property (as defined in the Uniform Commercial Code as adopted by the State of California (the "UCC") Section 9203) and has title and owns the Property or will have title to and,own the Prope1ty as of the date ofthe Borrower Agreements and at all relevant times applicable to this opinion; and (iii) with respect to fixtures which are included in the Property, such fixtures are located on the Property and the Borrower had, at the time of recording the Deed of Trust (as a fixture filing), an interest of record in the Property.

3 .I 0 We do not express an opinion as to (i) the priority of any liens or security interests purported to be granted in any personal property included within the Property, or (ii) the rights of the Lender vis a vis persons or entities which are not parties to the documents purporting to create liens or security interests with respect to any such lien or security interest, including but not limited to a trustee in bankruptcy or a debtor in bankruptcy. Before any lien or security interest granted or conveyed by any of the Borrower Agreements will become binding upon third parties, perfection of such i.nterest will be necessary.

3.11 We express no opinion as to whether the trustees or members of the Borrower have complied with any applicable fiduciary duties in connection with the authorization and performance ofthe Borrower Agreements.

4. Opinion.

On the basis of the foregoing, and in reliance thereon, and subject to the qualifications, limitations, assumptions and exceptions set forth in this letter, we are of the opinion that, as of the date hereof:·

4.1 Borrower is a nonprofit religious corporation duly incorporated and validly existing and in good standing under the laws of the State of California, with full corporate power to conduct the activities now being conducted by it and to carry out and perform its obligations under the Borrower Agreements.

4.2 Bonower has taken all corporate proceedings legally required to authorize the execution, delivery and performance ofthe Bon·ower Agreements. ·

4.3 The Bon·ower Agreements have been duly authorized, executed and delivered and, assuming the due and proper authorization, execution and delivery thereof by the other parties thereto, constitute valid and legally binding obligations of Borrower and, subject to the qualifications stated below, are enforceable against Borrower in accordance with their respective terms.

4814-2985-5492. 5 B-5

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4.4 The execution and delivery of the Borrower Agreements and the performance by Borrower of its obligations thereunder will'not violate the Articles of Organization or Bylaws of Borrower, or constitute a material default under existing law or regulations or any court order known to us or any Material Contract of Borrower.

4.5 To our knowledge, no order, consent, permit or approval of any trustee or holder of any indebtedness of Borrower identified to us by Bon·ower as a Material Contract is necessary in connection with the execution and delivery of the Borrower Agreements other than those that have been obtained. We express no opinion as to any approvals or consents as may be required under any state or federal blue sky or securities laws.

4.6 To our knowledge, except as disclosed to the Lender and the Authority in the Certificate Regarding Insurance and Material Litigation of the Borrower, dated December_, 2009, executed by the Risk Manager of Borrower, there are no actions,' suits, proceedings or investigations pending or, to the knowledge ofthe Bonower, threatened in writing against the Bonower or any of its properties, before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that are reasonably likely to be determined adversely to the Borrower and, if so determined adversely, (i) would reasonably be expected to materially and adversely affect the validity and enforceability of any of the Borrower Agreements or the operation, condition or feasibility of the Borrower's facilities; (ii) have an adverse affect on the ability of the Bonower to perform its obligations under the Borrower Agreements; or (iii) have an adverse effect on the status of Borrower as an organization described in Section 50l(c)(3) of the Code. In renderingthe opinion described in this paragraph 4.6, we have inquired of the Risk Manager at the Bo1Tower; attached to this opinion is the Officer's Certificate referenced in paragraph 1.3(b) above, in which the Risk Manager identifies all outstanding litigation against the Borrower and concludes that "the probable recoveries and estimated costs and expenses of defense will be entirely within the Borrower's applicable self-insurance expectations and/or insurance policies". We have not, with your consent, searched court records but have relied on this Officer's Certificate for the purpose of both the id~ntification

. and materiality of the litigation described in and the opinion rendered in this paragraph 4.6.

4.7 The Deed of Trust is in form sufficient to create a lien on the Property in favor ofthe Trustee named in the Deed of Trust once the Deed of Trust is recorded in the County Records ofthe county in which the Property is located.

4.8 The Borrower (a) has the corporate power and authority to conduct its hospital business as now being conducted by it, (b) is licensed by the Depa1tment of Health Services of the State of California to operate its hospital, and (c) to our knowledge, has entered into contracts to be paid or reimbursed for its costs and expenses under the third pmty payor programs identified to us by Bon·ower, including without limitation, Medicare and MediCal.

4.9 Based upon the BoJTower IRS Determination, the representations made in the Officers' Ce1tificates and the information contained in the 990s and based upon our review and analysis of the documents and transactions referenced in the 990s, the Bonower is an organization described in Section 501(c)(3) ofthe Code or corresponding provisions of prior law. To our knowledge, the Bonower has not received notice that such Borrower IRS Determination has been modified, limited or revoked as to the Bonower; and the BoJTower is exempt from federal income tax under Section 50l(a) ofthe Code, except as otherwise provided by Section 501(b) ofthe Code. We express no opinion as to the inclusion or exclusion of interest on the Note from the gross income of the owners thereof for federal income taxation purposes or as to the exemption of interest from personal income taxation of the State of California.

5. Exceptions.

We express no opinion as to:

5.1 The enforceability of the Bon·ower Agreements to the extent any such documents may be limited by (i) applicable bankruptcy, insolvency, re'organization or other similar laws affecting creditors' rights generally, (ii) legal or equitable principles limiting the enforceability of any of the remedies, covenants or other provisions pursuant to a court proceeding in equity or at law, or(iii) public policy which limits a debtor's right to waive the benefit of certain statutory provisions.

4814-2985-5492. 5 B-6

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1 , 5.2 The enforceability of payment obligations of the Borrower under the Borrower Agreements to the extent payments are to be made from assets of the Borrower which are donor-restricted or which are subject to a direct, express or charitable trust which does not permit the use of such assets for such payments.

5.3 The enforceability under certain circumstances of provisions expressly or by implication waiving stated rights, unknown future rights, defenses to obligations or rights granted by law, when such waivers are against . public policy or prohibited by law or are violative of equitable principles as determined by a court.

5.4 The unenforceability under certain circumstances under California or federal law or court decisions of provisions releasing a party against liability for wrongful or negligent acts or indemnifying a party to the extent that the events giving rise to the indemnity arise in whole or in part from the wrongful or negligent acts of the indemnitee, where such release or indemnification is contrary to public policy or law.

5.5 The effect of California Civil Code Section 1670.5 which may limit the enforceability of any provision in the Borrower Agreements which a court finds as a matter oflaw or equity to have been unconscionable atthe time it was made.

5.6 The enforceability under certain circumstances of provisions imposing liabilities constituting (although not necessarily identified as) penalties or forfeitures or providing for unreasonable late payment charges or an unreasonable increase in interest rate upon delinquency in payment or upon the occurrence of a default.

5.7 The enforceability of any covenants or provisions where (i) the breach of such covenants or provisions imposes restrictions or burdens upon the debtor, including the acceleration of indebtedness due under debt instruments, and it cannot be demonstrated that the enforcement of such restrictions or burdens is rea~sonably necessary for the protection of the creditor, or (ii) the creditor's enforcement of such covenants or provisions under · the circumstances would violate the creditor's implied covenant of good faith and fair dealing.

5.8 The enforceability under certain circumstances of provisions to the effect that rights or remedies are not exclusive, that every right or remedy is cumulative and may be exercised in addition to or with any other right or remedy, that election of a particular remedy or remedies does not preclude recourse to one or more other remedies or that failure to exercise or delay in exercising rights or remedies will not operate as a waiver of any such right or remedy.

5.9 The enforceability of the provisions regarding consent to service, jurisdiction, venue or forum of any claim, demand, action or cause of action arising under or related to the Borrower Agreements or the transactions contemplated therein. We express no opinion as to any provision purporting to waive rights to trial by jury, service of process or objections to the laying of venue or to forum on the basis ofj01·um non conveniens in connection with any litigation arising out of or pertaining to the Borrower Agreements.

5 .I 0 The enforceabi I ity of any provisions purporting to appoint the Lender or any other party as attorney-in-fact for the Borrower or to grant an in·evocable power of attorney to the Lender or any other party with respect to the Borrower.

5.11 The effect of Section 1698 of the California Civil Code and similar statutes and federal laws and judicial decisions (i) providing that oral modifications to a contract or waivers of contractual provisions may be .enforceable, if the modification was performed, notwithstanding any express provision in the agreement that the agreement may only be modified or an obligation thereunder waived in writing, or (ii) creating an implied agreement from trade practices or course of conduct. Specifically, any provisions in the Borrower Agreements requiring that waivers must be in writing may not be binding or enforceable ifa non-executory oral agreement has been created modifying any such provision or an implied agreement by trade practice or course of conduct has given rise to a waiver.

5.12 The availability of any specific performance remedy, anyinjunctive relief or any equitable remedy.

48 I 4-2985-5492. 5 B-7

5.13 The enforceability of the Borrower Agreements as-they relate to the procedural requirements of applicable law, which apply to the enforcement of deeds of trust and other security agreements, including, without limitation, anti-deficiency and one-form-of-action legislation in California (including Sections 726, 580b and 580d of the California Code of Civil Procedure), and the unenforceability under certain circumstances of contractual provisions respecting various summary remedies or "self-help" remedies without notice or opportunity for hearing or coiTection, especially if their operation would work a substantial forfeiture or impose substantial penalty upon the burdened party.

6. Additional Assumptions, Limitations, Qualifications and Exceptions as to the Opinion.

We specifically call your attention to certain general principles of California law, the following:

6.1 Those provisions in the Borrower Agreements imposing late charges or additional interest in the event of default or prepayment penalties are governed by the rules relating to "liquidated damages" as set forth in California Civil Code Section 1671, et seq., and relevant case law. Moreover, to the extent that late charges would otherwise be allowed, California Civil Code Section 2954.5 imposes certain requirements of notice with respect to the imposition of such charges.

6.2 Section 1717 of the California Civil Code provides that, where a contract permits one party to the contract to recover attorneys' fees, the prevailing pmty in any action to enforce any provision of the contract shall be entitled to recover its reasonable attorneys' fees.

6.3 The enforceability of the Borrower Agreements is subject to any evidence extrinsic to the provisions of the Borrower Agreements thatthe parties intended in meaning contrary to those expressed by those provisions and we express no opinion on the effect on the enforceability of the BorrowerAgreements of decisions by California courts admitting evidence extrinsic to a written agreement between the parties thereto that the parties intended a meaning contrary to that expressed by the parties in writing; however, we have no current actual knowledge of any such extrinsic matters. ·

6.4 With respect to any claim of a lien in real prope1ty, you should be aware that your creation and perfection of such lien and your realization of such lien in the event of default will be generally governed by the provisions and procedures set forth in Title XV Chapter 2 ofthe California Civil Code and Sections 580d and Title X Chapter I of the California Code of Civil Procedure. We express no opinion as to the enforceability of any purported waiver of the provisions of such sections. Without limiting the foregoing, we call your attention·to the following:

(a) Section 726 ofthe California Code of Civil Procedure provides that any lawsuit to recover on a debt or other right secured by a mmtgage or deed of trust on real property must comply with the provisions of that section, which provisions relate to and specify the procedures for the sale of encumbered property, the application of proceeds, the rendition in certain cases of a deficiency judgment and other related matters,. We also advise you that your failure to comply with the provisions of such section may result in the loss ofyoui liens on the real and personal property described in the Borrower Agreements.

(b) Section 580d of the California Code of Civil Procedure provides that no deficiency judgn1e11t shall berendered upon a note secured by a deed of trust or mortgage on real property after sale ofthe real property under the power of sale contained in such deed of trust or mmtgage ..

6.5 We do not opine as to the adequacy of any descriptions of real property or fixtures in the Borrower Agreements. You should be aware that a perfected security interest in collateral may become unperfected (a) ifthe debtor changes its state of organization, or (b) if the financing statement becomes seriously misleading.

6.6 To the extent the Deed of Trust purpmts to secure the performance of nonmonetary obligations, you should be aware that the remedy upon breach of any such nonmonetary obligation may be limited to · acceleration of the indebtedness secured by the Deed of Trust and the pursuit of recovery of such indebtedness in accordance with the terms of the Deed of Trust and applicable statutory procedural requirements.

4814-2985-5492 5 B-8

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7. General Limitations.

7. I Our opinions are limited in all respects to the substantive law of the State of California and, where applicable, the substantive law ofthe United States.

7.2 We express no opinion with regard to the truth or accuracy of the factual schedules, certificates or other materials furnished. While we have unde1iaken no investigation of such factual schedule"s, certificates or other materials, we have no actual knowledge that any such factual schedules; certificates or other materials are not truthful _or accurate.

8. Reliance.

This opinion is being rendered pursuant to the Loan Agreement, as of the date hereof, solely for the benefit of the Lender (and its successors and assigns), the Authority'and Bond Counsel in connection with the transaction described herein; and this opinion may not be used, circulated, quoted, copied or relied upon for any other purposes, nor may it be relied upon by any other entity without our express written approval. This opinion is limited to the matters stated herein and is given as of the date hereof. We disavow any obligation to update this opinion or advise you of any changes in our opinion in the event of changes in applicable laws or facts or if additional or newly· discovered information is brought to our attention. This opinion is provided to you as a legal opinion only and not as a guaranty or waJTanty of the matters discussed herein or in the documents referred to herein. No opinion may be infeJTed or implied beyond the matters expressly stated herein and no portion of this opinion may be quoted or in any other way published without the prior written consent of the undersigned.

I

Very truly yours,

Eisner & Kelly LLP

4814-2985-5492. 5 B-9

EXHIBIT C

FORM OF INVESTOR'S LETTER OF REPRESENTATION

California Enterprise Development Authority 550 Bercut Drive, Suite G Sacramento, California 95814

Lorna Linda University Medical Center 11234 Anderson Street Lorna Linda, California 92354

Kutak Rock LLP 515 South Figueroa Street, Suite 1240 Los Angeles, California 90071

Re: Loan Agreement, dated as of December 1, 2009, by and among Siemens Public,·· Inc. ("Lepder"), the California Enterprise Development Authority ("Al,l.thority") and the Lorna Linda University Medical Center ("Borrower")


The undersigned, as Lender under the Loan Agreement described above (the "Loan Agreement"), hereby represents and warrants to you that:

1. The undersigned has duly authorized, by all necessary action, the making of the Loan contemplated pursuant to the terms and provisions of the Loan Agreement. The undersigned is authorized to execute and deliver this letter.

2. We have sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal imd other tax-exempt obligations, to be able to evaluate the risks and merits of the investment represented by Authority Payments, the Loan Payments (capitalized terms used herein and not otherwise defined shall have the meanings given such term~ in the Loan Agreement) and the Loan Agreement. We are able to bear the economic risks of such investment. ·

3. We understand that the obligations of Authority to make payments un_der the Loan Agreement (the "Authority Payments") are special, limited obligations payable solely from amounts paid to Authority from Borrower pursuant to the terms of the Loan Agreement and that notwithstanding anything to the contrary contained in tlie Loan Agreement, Authority shall not be obligated to make Authority Payments, or pay any portion of the costs of the Property or make any other payment or advance any moneys or be liable for any other costs or expenses in connection with the Property, Authority Payments, the Loan Payments or the Loan Agreement, except from the amounts paid to Authority from Borrower pursuant to the Loan Agreement, and no such payment shall constitute a charge against the general credit of Authority, the State of

4814-2985-5492.5

California or any political subdivision thereof. We further understand that Authority shall not be directly or indirectly or contingently or morally obligated to use any other moneys or assets of Authority to pay Authority Payments or any portion of the costs of the Property or for all or any portion of such other costs or expenses.

4. We acknowledge that we have either been supplied with or have been given access to information, including financial statements and other financial information which we have requested, and we have had the opportunity to ask questions and receive answers concerning Borrower, the Authority Payments, the Loan Payments, the Loan Agreement and the security therefor, so that we have been able to make the Loan on the terms as set forth in the Loan Agreement. We acknowledge that we have not relied upon Authority for any information in connection with the Loan, except as set forth in Article IV of the Loan Agreem~nt.

5. We have made our own inquiry and analysis with respect to the Loan Agreement, the Authority Payments, the Loan Payments and the security therefor, and other material factors affecting the security and payment of such payments set forth in the Loan Agreement. We are aware that the business of Borrower involves certain economic variables and risks that could adversely affect the security for the payments to be made by Authority to Lender under the terms of the Loan Agreement. We have examined drafts in final form of the basic legal documents relating to the Loan Agreement, including the proposed legal opinions to be delivered by Borrower's counsel and Kutak Rock, as special counsel.

6. We understand that the Loan Agreement (including the right to receive Authority Payments and Loan Payments under the terms of the Loan Agreement) (a) is not being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, (b) will not be listed in any stock or other securities exchange, (c) will not carry a rating from any rating service and (d) will be delivered in a form which may not be readily marketable.

7. We understand that the Loan Agreement (including the right to Authority Payments and Loan Payments under the terms of the Loan Agreement) has not been registered under the Securitie,s Act of 1933, as amended. We represent to you that we are purchasing the Loan for investment for our own acco~nt and not with a present view toward resale or the distribution thereof, in that we do not presently intend to resell or otherwise dispose of all or any part of our interests in the Loan, except for sale to an Affiliate, but we reserve the right to transfer the Loan or any interest therein in accordance with the Loan Agreement. Except for a transfer to an entity which Lender has certified to Authority and Borrower that such entity is an Affiliate, we agree not to sell, transfer or otherwise dispose of or permit such Affiliate to sell, transfer or otherwise dispose of all or part of our interest in the Loan except in accordance with the requirements of the Loan Agreement.

8. We agree to indemnify and hold harmless Authority with respect to any claim asserted against Authority that is based upon oui· sale, transfer or other disposition of our interest in the Loan Agreement in violation of the provisions hereof or of the Loan Agreement, other than any claim that is based upon the gross negligence or willful misconduct of Authority.

4814-2985-5492.5 C-2

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9. We have executed and delivered this letter in connection with the execution and delivery of the Loan Agreement as an inducement to Authority to cause the execution and delivery ofthe Loan Agreement to us. Only the addressees hereof may rely upon this letter.


By ____________ ~------------Authorized Officer

By ________________________ __ Authorized Officer

48 I 4-2985-5492.5 C-3

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EXHIBITD

LEGAL DESCRIPTION OF THE PROPERTY

The real property, together with all improvements thereon, referred to in this Security Instrument is situated in the County of San Bernardino, State of California and is described as follows: .

PARCEL A:

PARCEL 1 OF PARCEL MAP NO. 3360, IN THE CITY OF LOMA LINDA, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 32 OF PARCEL MAPS. PAGES 52 AND 53, RECORDS OF SAID COUNTY.

PARCEL B:

THAT PORTION OF PARCEL 3, PARCEL MAP NO. 4423, AS RECORDED IN BOOK 42 OF PARCEL MAPS, PAGE 37, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:

BEGINNING AT THE NORTHWEST CORNER OF SAID PARCEL 3:

THENCE N 89 42' 52" E ALONG THE NORTH LINE OF SAID PARCEL, 37.00 FEET;

THENCE S 0 29' 55" E PARALLEL WITH THE WEST LINE OF SAID PARCEL, 45.00 FEET;

THENCE S 89 42' 52" W, 37.00 FEET TO THE WEST LINE OF SAID PARCEL;

THENCE N 0 29' 55" W, 45.00 FEET TO THE POINT OF BEGINNING.

PARCELC:

EASEMENT RIGHTS DECLARED AND GRANTED BY THE DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS (PARKING), DATED DECEMBER_, 2009, AS RECORDED IN BOOK , PAGE OF OFFICIAL RECORDS OF SAN BERNARDINO COUNTY, AFFECTING THE LAND DESCRIBED AS FOLLOWS:

PARCEL 2 OF PARCEL MAP 4423, AS SHOWN BY MAP ON FILE IN BOOK 42 PAGE (S) 37, OF PARCEL MAPS, RECORDS OF SAN BERNARDINO COUNTY, CALIFORNIA.

APN: 0284-201-19 (Parcel A) and 0284-201-28 (Parcel B) and 0284-201-22 (Parcel C)

4814-2985-5492.5

EXHIBITE

LIST OF PERMITTED ENCUMBRANCES

"Permitted Encumbrances" means:

(a) Liens for real estate taxes, assessments water charges, sewer charges and other governmental charges or levies not yet due or as to which the period of grace, if any, related thereto has not expired or which are subject to a good faith contest so long as they do not subject the Property to forfeiture or impair the liens of the Deed of Trust;

(b) the claims or liens of materialmen, mechanics, carriers, warehousemen, processors or landlords for labor, materials, supplies or rentals incurred in the ordinary course of business after the recording of the Deed of Trust in aggregate the principal amount not to exceed $500,000, which are subject to a good faith contest so long as they do not subject the Property to forfeiture or impair the liens of the Deed of Trust;

(c) Liens constituting encumbrances in the nature of zoning restrictions, landmark restrictions, easements and rights or restrictions of record on the use of real property; which in the aggregate are not substantial in amount or material in nature and which do not, in any case, detract from the value of such property or impair the intended or proposed use thereof in the ordinary conduct of business;

(d) Liens of the Lender;

(e) any judgment lien or judicial against the Borrower so long as such judgment is being contested and execution thereon is· stayed so long as it does not subject the Property to forfeiture or impair the lien ofthe Deed of Trust;

(f) leases or subleases of real property granted for which a subordination in the form required by the Loan Agreement has been executed by the lessee or sublessee;

(g) any lien shown as an exception in Schedule B to the Title Policy approved by the Lender;

(h) rights reserved to or vested in any municipality or public authority by the terms of any right, power, franchise, grant, license, permit or provision of law, affecting any property, to (1) terminate such right, power, franchise, grant, license or permit, so long as the exercise of such right would not materially impair the use of the property or materially and adversely affect the value thereof, or (2) purchase, condemn, appropriate or recapture, or designate a purchaser of, such property; and.

(i) purchase money security interests and security interests existing on any property prior to the time of its acquisition through purchase, merger, consolidation or otherwise, or placed upon property to secure a portion of the purchase price thereof, or placed upon instruments evidencing Indebtedness to secure the purchase price thereof, or lessee's interests in leases required to be capitalized in accordance with GAAP.

4814-2985-5492.5

EXHIBIT F

FORM OF NONDISTURBANCE, SUBORDINATION AND ATTORNMENT AGIU1EMENT

This SUBORn INA TION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT ("Agreement"), dated as of December 1, 2009, is executed by [TENANT] ("Tenant"), SIEMENS PUBLIC, INC. ("Lender"); references to Lender shall include Lender's successors, designees and assigns and any purchaser of the Property (defined below) by foreclosure, conveyance in lieu of foreclosure or otherwise), and LOMA LINDA UNIVERSITY MEDICAL CENTER ("Landlord").

Landlord and Tenant have entered into a lease (including and supplements and amendments, the "Lease") dated [LEASE DATE], relating to the premises described in the Lease (the "Premises"} and being part of the prop.erty described in the attached Exhibit A incorporated into this Agreement by this reference (the "Property"). Lender has made or will make a loan to Landlord in the approximate principal amount of $8,500,000, secured by a deed of trust, mortgage or security deed and assignment of leases and rents (the "Mortgage") from Landlord to Lender covering the Prope1ty. Tenant agrees that the Lease shall be subject and subordinate to the Mmtgage, subject to the terms of this Agreement;

In consideration ofTen Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, and notwithstanding anything in the Lease to the contrary, the pmties agree as follows:

1. Subordination. The Lease with all rights, options (including options to acquire or lease all or any pa1t of the Property), liens and charges created by the Lease, is and shall continue to be subject and subordinate in all respects to the Mmtgage and to any renewals, modifications, consolidations, replacements and extensions to the Mmtgage and to all advances secured by the Mortgage.

2. Non-Disturbance. If Lender becomes the owner of or otherwise obtains control of the Premises by foreclosure, conveyance in lieu of foreclosure or otherwise, and so long as Tenant complies with and performs its obligations under the Lease, (i) the Lease shall continue in full force and effect as a direct Lease between Lender and Tenant, subject to all of its terms, covenants and conditions, for the balance of the term of the Lease, and Lender will not disturb the possession of Tenant, and (ii) the Lender shall recognize Tenant as the tenant of the Premises for the remainder of the term of the Lease in accordance with the provisions of the Lease, provided, however, that Lender shall not be subject to or liable for (a) any claims, offsets or defenses which Tenant might have against any prior landlord' (including Landlord); (b) any act or omission of any prior landlord (including Landlord); (c) any rent or additional rent Tenant might have paid for more than the current month; (d) any security deposit or other prepaid charge paid to any prior landlord (including Landlord); (e) any amendment or modification ofthe Lease made without Lender's written consent. Lender may name or join Tenant in any foreclosure or other action or proceeding initiated by Lender pursuant to the Mortgage to the extent necessary under applicable law for Lender to attain a complete foreclosure or other remedy.

3. Attornment. If Lender becomes the owner of the Premises by foreclosure, conveyance in lieu of foreclosure cir otherwise, Tenant shall attorn to and recognize Lender as the landlord under the Lease for the remainder of the term of the Lease, and Tenant shall perform and observe its obligations under the Lease. Tenant agrees to execute and deliver upon request of Lender an appropriate agreement of attornment to Lender (including any subsequent titleholder of the Prope1ty).

4. Consent; Notice. Tenant acknowledges that Landlord will, by an assignment of leases contained in the Mmtgage or otherwise, assign the Lease to Lender, and Tenant expressly consents to the assignment. Tenant agrees to notify Lender of any default(s) by Landlord under the Lease; Lender shall have the same right, at Lender's option, to cure default( s) as Landlord has under the Lease.

4814-2985-5492.5

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5. Lender Obligations. Lender shall not, either by virtue of the Mortgage, the assignment of leases or this Agreement, be or become a mortgagee in possession or be or become subject to any liability or obligation under the Lease or otherwise until Lender has acquired the interest.ofLandlord in the Pi·emises, by foreclosure or otherwise, and then Lender's liability or obligation under the Lease shall extend only to those liabilities or obligations accruing subsequent to the date that Lender has acquired the interest of Landlord in the Premises as modified by the terms of this Agreement. Lender shall have no obligation or incur any liability with respect to: (a) the construction or completion of the improvements in which the Premises are located; (b) completion of the Premises or any improvements for Tenant's use and occupancy; or (c) any warranties whatsoever, including, any warranties respecting (i) use, compliance with zoning, hazardous wastes or environmental laws; (ii) Landlord's title or authority; or (iii) habitability, fitness for purpose or possession. If Lender acquires title to the Premises or the Property, Lender's obligations and liability under or with respect to the Lease shall be limited to Lender's then equity interest, if any, in the Premises, and Tenant shall look exclusively to such equity interest of Lender, if any, in the Premises for the payment and discharge of any obligations or liability imposed upon Lender under this Agreement, under the Lease or under any new lease of the Premises.

6. Severability. If any portion ofthis Agreement is held invalid or inoperative, then all of the remaining p01tions shall remain in full force and be given effect so far as is reasonable and possible.

7. Notice. Any and all notices or other communications permitted or required under this Agreement shall be in writing and shall be deemed effective upon the earlier of receipt by a party or five (5) days after deposit in the United State~ mail, postage prepaid, certified with teturn receipt requested, addressed to the address of the party appearing next to its signature block below or at such other.;· . address(s) previously communicated in a notice by that party.

8. Binding Effect. This Agreement is binding upon and shall inure to the benefit of each of the parties and their respective heirs, legal representatives, successors, successors-in-title and assigns.

9. Counterparts. To facilitate execution, this instrument may be executed in as many counterparts as may be convenient or required. All counterparts shall collectively constitute a single instrument. It shall not be necessary in making proof of this instrument to produce or account for more than a single counterpart containing the respective acknowledged signatures of, or on behalf of, each of the pa1ties to this Agreement. Any signature or acknowledgment page to any counterpa1t may be detached from such counterpa1t without impairing the legal effect of the signatures or acknowledgments thereon and thereafter attached to another counterpait identical thereto except having attached to it additional signature or acknowledgment pages.

10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws ofthe State of California.

[INSERT SIGNATURES AND ACKNOWLEDGMENTS FOR TENANT, LENDER AND LANDLORD]

4814-2985-5492.5 F-2

$8,500,000

EXHIBITG·

FORM OF BORROWER NOTE

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED

NOTE

December 22, 2009 No.1

LOMA LINDA UNIVERSITY MEDICAL CENTER, a limited liability company duly organized and validly existing under the laws of the State of California ("Borrower"), for value received, hereby promises to pay the CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY, an agency of the State of California ("Authority"), the (a) principal sum of. EIGHT MIL~ION FIVE HUNDRED THOUSAND DOLLARS ($8,500,000), (b) inter~st on the unpaid balance of such principal sum from and after the date of this Note at the interest rate on the Loan (as defined in the hereinafter identified Loan Agreement) and (c) interest on overdue principal, and to the extent permitted by law, on overdue interest, at the interest rate provided

· under the terms of the Loan Agreement.

This Note has been executed and delivered by Borrower pursuant to a certain Loan Agreement, dated as of December 1, 2009 (the "Loan Agreement"), by and among Authority, Borrower and Siemens Public, Inc. ("Lender"). Terms used but not defined in the Loan Agreement shall have the meanings ascribed to such terms in the Loan Agreement.

Authority has loaned to Borrower (the "Loan") the amount of $8,500,000 received from Lender pursuant to the terms of the Loan Agreement. Proceeds of the Loan will be used by Borrower to finance and refinance (1) the acquisition of the real property and improvements located at 25455 Bmion Road, Lorna Linda, California and (2) the acquisition, construction, installation and equipping of certain capital improvements to Borrower's campus. Borrower has agreed to repay such Loan by making Loan Payments at the times and in the amounts set forth in the Loan Agreement. The Loan has been made concurrently with the execution and delivery of this Note.

Interest accruing on the principal balance of the Loan outstanding from time to time shall be payable monthly and upon earlier demand in accordance with the terms of the Loan Agreement or prepayment in accordance with the Loan Agreement. ·

Borrower shall pay to Lender, as assignee of Authority, Loan Payments, in the amounts and on the dates set forth in Exhibit A to the Loan Agreement with respect to the principal of the Loan and interest on the Loan as provided in Section 2.04 of the Loan Agreement. All payments to Lender shall become due at 1 :00 p.m., Pacific Time, on the day when due without

4814-2985-5492.5

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presentment, demand, ·protest or notice of any kind. Such Loan Payments shall be made in lawful money ofthe United States of America.

The obligations of Borrower to make the Loan Payments required under the Loan Agreement and to make other payments under the Loan Agreement and this Note and to perform and observe the covenants and agreements contained in the Loan Agreement, including the obligation to make all Additional Payments, shall be absolute and unconditional in all events, without abatement, diminution, deduction, setoff or defense for any reason, including (without limitation) any failure of any component of the Project to be delivered or installed, any defects, malfunctions, breakdowns or infirmities in the Project or any accident, condemnation, destruction or unforeseen circumstances.

Borrower may, and in certain instances, shall be required to, prepay the Loan and this. Note in accordance with the terms of the Loan Agreement.

Borrower hereby certifies that all acts, conditions and things required to exist, to happen and be performed precedent to and in the issuance of this Note, exist, have happened and have been performed, and that the issuance of this Note has been duly authorized by Borrower.

48 I 4-2985-5492.5 G-2

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l IN WITNESS WHEREOF, Borrower has executed this Note as of the date first above

written.

4814-2985-5492.5


By:-=~~~=-------------~----Ruthita J. Fike Chief Executive Officer

By:~~--~77~-----------------Steven L. Mohr Senior Vice President, Finance

[Signature Page to Borrower Note]

G-3

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~ ENDORSEMENT AND ASSIGNMENT

FOR VALUE RECEIVED, the California Enterprise Development· Authority ("Authority"), hereby endorses and sells, assigns and transfers unto Siemens Public, Inc., as lender ("Lender") under the Loan Agreement, dated as of December 1, 2009, by and among Authority, Lender and Lorna Linda University Medical Center, the within Note and all of Authority's right, titl,e and interest under the Loan Agreement, except Authority's rights to payment of expenses, the rights of Authority to indemnification and the rights of notice, inspection and consent.

IN WITNESS WHEREOF, the undersigned have set their hands as of the 22nd day of December, 2009.

Attest:

By ________________________ __ Gurbax Sahota, Assistant Secretary

48 I 4-2985-5492.5


By~-------------------------------Wayne Schell, Chair .

G-4

EXHIBITH

FORM OF AUTHORITY NOTE

No.1· · $8,500,000

THIS NOTE MAY ONLY BE REGISTERED IN THE NAME OF, OR ~

. TRANSFERRED TO, AN "AFFILIATE" OF LENDER, A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN THE LOAN AGREEMENT.

UNITED STATES OF AMERICA STATE OF CALIFORNIA

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF

. OR ANY LOCAL AGENCY IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, ON, OR INTEREST ON THIS NOTE.

Rate of Interest Maturity Date Dated Date

Variable Rate December 22, 2019 December[_], 2009

REGISTERED OWNER: SIEMENS PUBLIC, INC.

PRINCIPAL AMOUNT: EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS .

THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY, an agency of the State of California (the ''Authority"), for value received, hereby promises to pay (but only out of Revenues as hereinafter provided) (a) to the order of SIEMENS PUBLIC, INC., (with its successors and assigns, the "Owner"), the principal sum of EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS ($8,500,000); (b) interest on the unpaid balance of such principal sum from and after the date of this Authority Note at the interest rate on the Loan (as hereinafter defined); and (c) interest on overdue principal, and to the extent permitted by law, on overdue interest, at the interest rate provided under the terms of the Loan Agreement. On December 22, 2019, all unpaid principal and accrued and unpaid interest on this Authority Note shall be due and payable in full.

This Authority Note has been executed and delivered by the Authority pursuant to a ce1iain Loan Agreement, dated as of December f. 2009 (the "Loan Agreement"), by and among

·Authority, Borrower and Siemens Public, Inc. ("Lender"). Terms used but not defined in this Authority Note shall have the meanings ascribed to such terms in the Loan Agreement.

The Lender has purchased this Authority Note and the Authority has loaned the proceeds of this Authority Note to the Borrower (the "Loan"). pursuant to the terms of the Loan Agreement. Proceeds of the Authority Note will be loaned tp the Borrower for the Borrower to finance and refinance the Project.

48 I 4-2985-5492.5

The Authority has agreed to pay the Authority Note (but only out of Revenues) by making Authority Loan Payments at the times and in the amounts set forth in the Loan Agreement.

The obligation of the Authority to make Authority Loan Payments is a special, limited obligation of the Authority, and such Authority Loan Payments are payable solely from the Loan Payments to be made by Borrower to Lender, as assignee of the Authority, under the Loan pursuant to the Loan Agreement and the Borrower Note, together with other moneys, including investment income on certain funds and accounts, including the Escrow Fund (the "Revenues"). Neither the faith and credit nor the taxing power of the State of California or any political subdivision thereof or any local agency is pledged to the payment of the principal of, premium, if any, on, or interest on this Authority Note.

The principal amount of this Authority Note and the Borrower Note outstanding from time-to-time shall bear interest at the applicable Interest Rate. Interest accruing on the principal balance of the Authority Note outstanding from time-to-time shall be payable (but only out of Revenues) monthly in arrears and upon earlier demand in accordance with the terms of the Loan Agreement or prepayment in accordance with the Loan Agreement.

Authority shall pay to Lender Authority Loan Payments (but only -out of Revenues), in the amounts and on the dates set forth in Exhibit A to the Loan Agreement with respect to the principal of the Authority Loan and interest on the Authority Loan as provided in Section 2.04 of the Loan Agreement. All payments to Lender shall become due at 1:00 p.m., Los Angeles time, on the day when due without presentment, demand, protest or notice of any kind. Such Authority Loan Payments shall be made in lawful money of the United States of America .

. No recourse shall be had for the payment of the principal of, premium, if any, or interest on this Authority Note or for any claim based thereon or upon any obligation, covenant or agreement in the "Loan Agreement, against any past, present or future member, director, officer, employee or agent ofthe Authority, or through the Authority, or any successor to the Authority, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such member, director, officer, employee or agent as· such is hereby expressly waived and released as a condition of and in consideration for the execution of the Loan Agreement and the issuance of this Authority Note.

No member, officer, employee or agent of the Authority, nor any individual executing this Authority Note, shall in any event be subject to any personal liability or accountability by reason of the issuance ofthis Authority Note.

Authority may, and in certain instances, shall be required to, prepay the Authority Loan and this. Authority Note (but only out of Revenues) in accordance with the terms of the Loan Agreement..

It is hereby certified that all acts, conditions and things required to exist, to happen and be performed precedent to and in the issuance of this Authority Note, do exist, have happened and have been performed in due time, form and manner as required by the Constitution and statutes of the State of California.

4814-2985-5492.5 H-2

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IN WITNESS WHEREOF, the Authority has caused this Note to be executed in its name and on its behalf.

Dated: December 22, 2009

Attest:

By ____________ ~-----------Gurbax Sahota, Assistant Secretary


BY--------------------------~--Wayne Schell, Chair

[Signature Page to Authority Note]

48 I 4-2985-5492.5 H-3

EXHIBIT I

FORM OF TENANT ESTOPPEL CERTIFICATE

·Siemens Public, Inc. 3411 Silverside Road Hanby Building, Suite 100 Wilmington, Delaware 19810

TENANT ESTOPPEL CERTIFICATE

______ ,20_

Attention: Director of Municipal Leasing

Date: Date:

Lender: Lender N arne: Landlord: Landlord Name:

Tenant: Tenant: Property: J Property: Leased Premises Suite(s) Leased Premises Premises Square Footage Premises Square Footage square feet

Lease (full copy attached): Lease (full copy attached): Lease Date: Lease Date: Lease Supplements and Lease Supplements and Amendments (copies attached) Amendments (copies attached)

Commencement Date Commencement Date Current Termination Date Current Termination Date Remaining Renewal Options Remaining Renewal Options of each

Security Deposit $Security Deposit Current Monthly Rent $Current Monthly Rent Monthly CAM $0 Date to Which Rent Paid: Rent Paid to Date:

·Please confirm accuracy of all data filled in above.

Tenant hereby represents, warrants and certifies to Lender, as follows:

Tenant is the tenant of Landlord under the Lease with respect to the Leased Premises, comprised of approximately the Premises Square Footage. Other than as contained in the Lease

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l

., and the Lease Supplements and Amendments, there are no promises, agreements, understandings or commitments between Landlord and Tenant concerning the Leased Premises~

Tenant has not given Landlord any tenriination notice with respect to the· Lease. Tenant has neither sublet any pmiion of the Leased Premises nor·assigned any interest in the Lease.

To the best of Tenant's knowledge, information and belief, as ofthis date, there exists no default, or any circumstance that with the passage of time would be a default, under the terms .of the Lease. Tenant acknowledges that the space Jor parking automobiles actually provided by Landlord satisfies the requirements of the Lease.

Tenant presently claims no concession, rebate, credit or set-off against rentals and has no knowledge of any circumstances that will give rise to any concession, rebate, credit or set-off against its obligation for present or future rentals under the Lease. There has been no prepayment of rent more than thirty (3.0) days in advance. The stated Current Monthly Rent has been paid to and including the Rent Paid to Date. In addition to monthly base rent, Tenant is paying a monthly common area maintenance charge in the stated .amount of Monthly CAM.

Tenant has paid the Security Deposit Amount to the landlord as a security deposit.

The Lease is in full force and effect as of this date. Tenant is occupying the Leased Premises, is doing business for which the Leased Premises was leased, and is paying rent on a current basis as required by the Lease.

' The term of the Lease commenced on the stated Commencement Date and will, subject to the Lease's terms and conditions, terminate (taking into account options that have beel) exercised) on the stated Current Termination Date. The Lease also contains the Remaining Renewal Options, if any. Tenant has not been granted any other renewal options, or any option or right of first refusal with respect to the Leased Premises or any other space in the building or the Property.

Tenant has no notice of a prior assignment, hypothecation, or pledge of rents under the Lease.

Tenant has unconditionally accepted the Leased Premises. Tenant acknowledges that all requirements, conditions, representations, warranties and obligations of the Landlord as stipulated in the Lease have been satisfied to the full satisfaction of Tenant.

Tenant agrees to deliver to Lender copies of all notices given to Landlord under or with respect to the Lease or the Leased Premises at the address of Lender stated above, with a copy to

SIEMENS FINANCIAL SERVICES, INC. 170 Wood A venue South Iselin, NJ 08830

or to such other additional or different address( es} as Lender may direct by notice to Tenant.

Tenant acknowledges that Lender and Landlord are entitled to rely on Tenant's certifications and agreements stated in this Tenant Estoppel Certificate.

The person signing this Tenant Estoppel Ce1iificate on the part of Tenant represents that .he or she is duly authorized and qualified to sign and, by signing, to bind Tenant.

4814-2985-5492.5 I-2

Tenant:

By ______________________________ _

Printed Name: Title: Tenant

48 I 4-2985-5492.5 I-3

KUTAK ROCK LLP

SUITE 1240

515 SOUTH FIGUEROA STREET

LOS ANGELES, CALIFORNIA 90071-3329

213-312-4000

FACSIMILE 213-312-4001

www.kutakrock.com

December 22, 2009

California Enterprise Development Authority 550 Bercut Drive, Suite G Sacramento, California 95814

Siemens Public, Inc. 3411 Silverside Road Hanby Building, Suite 100 Wilmington, Delaware 19810

Loan Agreement, dated as of December 1, 2009 by and among California Enterprise Development Authority,

Lorna Linda University Medical Center and Siemens Public, Inc.


ATLANTA

CHICAGO

DENVER

DES MOINES

FAYETTEVILLE

IRVINE

KANSAS CITY

LITTLE ROCK

OKLAHOMA CITY

OMAHA

RICHMOND

SCOTTSDALE

WASHINGTON

WICHITA

We have acted as special counsel to the California Enterprise Development Authority (the "Issuer") in connection with the execution and delivery ofthe Loan Agreement, dated as of December 1, 2009 (the "Loan Agreement"), by and among Siemens Public, Inc. (the "Lender"), the Issuer and Lorna Linda University Medical Center (the "Borrower") pursuant to the provisions of Chapter 5 of Division 7 of Title 1 of the California Government Code (Commencing with Section 6500) and a resolution adopted by the Issuer on November 18, 2009 (the "Resolution"). The Loan Agreement evidences the Issuer's obligation to make certain payments to the Lender (the "Obligation") in the principal amount of $8,500,000 and a loan by the Issuer to the Borrower in the principal amount of $8,500,000 (the "Loan"). Terms not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement.

In such connection, we have reviewed the Loan Agreement, the Resolution, the Tax Regulatory Agreement, dated December 22, 2009 (the "Tax Regulatory Agreement"), by and between the Issuer and the Borrower, opinions of counsel to the Borrower with respect to the Borrower, the Loan Agreement and the Tax Regulatory Agreement, certificates of the Issuer, the Borrower, the Lender and others, and such other documents and matters to the extent deemed necessary by us to render the opinions set forth herein. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in such documents, and of the legal conclusions contained in the opinions referred to above, and we have assumed the genuineness of all documents and signatures presented to us

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(whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Issuer.

Certain requirements, agreements and procedures contained or referred to in the Loan Agreement, the Tax Regulatory Agreement and other relevant documents may be changed and certain actions (including, without limitation, prepayment of the Obligation) may be taken under the circumstances and subject to the terms and conditions set forth in such documents. No opinion is expressed herein as to the portion of the payments paid by the Issuer with respect to the Obligation designated as and comprising interest, as provided in the Loan Agreement, on or after any such change that occurs or action that is taken upon the advice or approval of special counsel other than ourselves.

The opinions or conclusions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur. Our engagement with respect to the Loan Agreement has concluded with its execution and delivery and we disclaim any obligation to update this letter. We have assumed compliance with all covenants and agreements contained in the Loan Agreement and the Tax Regulatory Agreement, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions, or events will not cause the portion of the payments paid by the Issuer with respect to the Obligation designated as and comprising interest, as provided in the Loan Agreement, to be included in gross income for federal income tax purposes.

Reference is made to the opinion of Eisner & Kelly, LLP, counsel to the Borrower, of even date herewith with respect to, among other matters, the due authorization, execution and delivery of the Loan Agreement by the Borrower and the status of the Borrower as an organization described under Section 501(c)(3) of the Code. We are assuming that the conclusions set forth in such opinions with respect to such matters are correct.

Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:

1. The Issuer has all requisite power and authority to enter into and perform its obligations under the Loan Agreement.

2. The execution, delivery and performance by the Issuer of the Loan Agreement have been duly authorized by all necessary action on the part of the Issuer, and such Loan Agreement has been duly executed and delivered by, and constitutes the legal, valid and binding obligation of, the Issuer, enforceable in accordance with its terms.

3. The Loan Agreement creates a valid assignment of the Loan Payments, to secure the payment by the Issuer of the principal of and interest with respect to, the Obligation, subject

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to the provisions of the Loan Agreement permitting the application thereof for the purposes and on the terms and conditions set forth in the Loan Agreement.

4. The Obligation is not a lien or charge upon the funds or property of the Issuer except to the extent of the aforementioned assignment of Loan Payments. Neither the faith and credit nor the taxing power of the State of California (the "State") or any political subdivision thereof is pledged to the payment of the principal of, premium, if any, or interest with respect to, the Obligation. Except to the extent of amounts payable by the Borrower to the Issuer and assigned to the Lender, the Obligation shall not constitute a debt of the State or any political subdivision thereof, and neither the State nor any political subdivision thereof is liable for the payment thereof except from amounts payable by the Borrower.

5. The portion of the payments paid by the Issuer with respect to the Obligation and which is designated as and comprises interest, as provided in the Loan Agreement, is excluded from gross income for federal income tax purposes under Section 1 03 of the Code and is exempt from State personal income taxes. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the portion of the payments paid by the Issuer with respect to the Obligation and which is designated as and comprises interest, as provided in the Loan Agreement, although we observe that the portion of each such payment is not a specific preference item nor included in adjusted current earnings for purposes of calculating the federal individual and corporate alternative minimum taxable income).

6. Because the Obligations have been properly designated as "qualified tax-exempt obligations" within the meaning of Section 265(b )(3) of the Code, in the case of certain banks, thrift institutions or other financial institutions owning the Obligations, a deduction is allowed for 80% of that portion of such institutions' interest expense ·allocable to interest on the Obligations.

In rendering the opinions expressed in this letter, we have made no independent review of the contractual arrangements or other business affairs of the Borrower or the Lender. With your permission, we have not investigated or reviewed any records of the Borrower or the Lender except as otherwise expressly noted above, nor have we conducted or ordered a search of any governmental, administrative or court records or dockets relating to the Borrower or the Lender.

We have not made any investigation of the representations and warranties set forth in the Loan Agreement and, unless otherwise expressly set forth in this letter, we express no opinion as to the accuracy or completeness of such representations and warranties. With respect to the accuracy of material factual matters which were not independently established, we have relied, to the extent we deem such reliance reasonable, upon discussions with the officers and agents of the Issuer and the Borrower and have relied upon their responses without further inquiry.

In connection with the execution and delivery of the Loan Agreement, we have not made or undertaken to make any investigation of the state of title to any of the property encumbered by the

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Loan Agreement, nor have we otherwise investigated the filing or recordation of any of the Loan Agreement. Accordingly, we express no opinion with respect to title to the property covered by the Loan Agreement or to the priority of the liens or security interests created by the Loan Agreement which are intended to create liens or encumbrances against all or any portion of the property covered ~hereby or any other collateral.

We have not examined and express no opinion on any zoning, subdivision, building codes or other ordinances or regulations, including without limitation those pertaining to the environment or hazardous substances applicable to the property referred to in the Loan Agreement and/or to the use, occupancy and operation thereof.

With respect to the opinions set forth above, you should also be aware that the enforceability of the Loan Agreement may be limited by or subject to the following provisions oflaw:

(i) Our opinions are specifically subject to and limited by (a) the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting the rights or remedies of creditors, (b) the effect of general principles of equity, whether enforcement is considered in a proceeding in equity or at law, and the discretion of the court before which any proceeding therefor may be brought, (c) the unenforceability under certain circumstances under law or court decisions of provisions providing for the indemnification of or contribution to a party with respect to a liability where such indemnification or contribution is contrary to public policy, (d) the unenforceability of any provision requiring the payment of attorney's fees, except to the extent that a court determines such fees to be reasonable, and (e) we express no opinion concerning the enforceability of the waiver of rights or defenses contained in the Loan Agreement; and

(ii) Certain remedies, waivers and other provisions of the Loan Agreement may not be enforceable; nevertheless, subject to the limitations expressed elsewhere in this letter, upon a material default by the Borrower in the payment of principal or interest with respect to the Loan as provided in the Loan Agreement or upon a material default by the Borrower in the performance of any other material covenant of the Loan Agreement, such unenforceability will not preclude (a) the acceleration of the obligation of the Borrower to repay such principal and interest, (b) the enforcement in accordance with applicable law of the assignment of rents set forth in the Loan Agreement, (c) the foreclosure (including foreclosure by power of sale granted under the Loan Agreement) in accordance with applicable law of the security interest in the collateral created by the Loan Agreement, and (d) judicial enforcement in accordance with applicable law of the obligation of the Borrower to repay such principal or such interest as provided in the Loan Agreement. With respect to the enforcement of the assignment of rents set forth in the Loan Agreement, we note in limitation of our opinions above that the only method that is clearly established under California law for enforcement of an assignment of rents is by appointment of a receiver by a court in an action for specific performance of the provisions of the Loan Agreement that provide for the assignment of rents.

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The opinions expressed in this letter are also subject and are qualified by the following:

1. Provisions of the Loan Agreement which: (i) allow self-help or summary remedies without consent, notice or opportunity for hearing or cure, or (ii) cause the Borrower to waive any right, remedy or defense provided by constitution or statute or otherwise available at law or in equity, including without limitation, the Borrower's statutory rights of cure or of redemption, or (iii) allow appointment of a receiver upon ex parte application as a matter of right, may be unenforceable.

2. To the extent the Loan Agreement provides for the waiver of stated rights or unknown future rights, or the waiver of defenses to obligations, which are violative of public policy, such provisions may be unenforceable.

3. Provisions of the Loan Agreement to the effect that rights or remedies are not exclusive, or that every right or remedy is cumulative and may be exercised in addition to or with any other right or remedy, or that the election of some particular remedy does not preclude recourse to one or another remedy may be unenforceable to the extent that: (i) they would compensate, or have the effect of compensating, the Lender in an amount in excess of the actual loss suffered by it, or (ii) enforcement of a subsequently selected right or remedy would cause prejudice to the Borrower as a result of its reliance upon any prior election of remedies.

4. Provisions of the Loan Agreement that impose penalties not reasonably calculated to compensate the Lender, but which penalize the Borrower, may be unenforceable.

5. The rights and remedies set forth in the Loan Agreement may be delayed as a result of proceedings to resist enforcement of the rights and remedies provided pursuant to such document.

6. We express no opinion as to the enforceability of any of the provisions of the Loan Agreement purporting to waive rights of the Borrower against the Lender or its agents, employees or officers resulting from their negligence, willful misconduct or breach of contract, or of any limitation upon the Borrower's remedies in the event of a breach of contract on the part of the Lender.·

7. We express no opinion as to the effect on the opinions herein stated of (i) the compliance or non-compliance of the Lender with any state, federal or other laws applicable to it, or (ii) the legal or regulatory status or the nature of the business of the Lender.

8. Other than as expressly stated in our opinion paragraph 5 above, we express no opinion with regard to any tax effect or tax implication of any provision of the Loan Agreement.

9. In reviewing the provisions of the Loan Agreement, a court, under California law, will apply a good faith and fair dealing standard to the extent provisions of the Loan Agreement

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appoint the Lender as attorney-in-fact for the Borrower, and, to the extent such standard is not met, such provisions may not be enforceable.

10. With respect to any provisions of the Loan Agreement stating that the same may only be amended or modified in writing, or stating that the consent of Lender to any action will only be effective if in writing, the same may not be enforceable, in that a court in reviewing the facts and circumstances may determine that a course of conduct has effected such amendment, modification or consent.

The opinions expressed herein are based only on the laws in effect as of the date hereof and in all respects are subject to, and may be limited by, future legislation and developing case law. We undertake no duty to advise you of the same.

This letter contains our opinions only and shall not be deemed to be a guaranty of the matters set forth herein. The opinions expressed in this letter are limited to the Loan Agreement as defined above and to the matters expressly set forth above; no opinion is to be inferred or may be implied beyond the opinions expressly so stated and no opinions are provided as to any matters not governed solely by the Loan Agreement.

The foregoing opinions are limited to matters governed by any laws of the State and the United States of America, and we do not express any opinion as to laws of any other jurisdiction.

This opinion letter is solely for your benefit in connection with the transactions covered by the first paragraph hereof, and may not be relied upon or used by, circulated, quoted or referred to, nor may copies hereof be delivered to, any other person without our prior written approval.

Very truly yours,

4813-4471-4757.1

No.1

THIS NOTE MAY ONLY BE REGISTERED IN THE NAME · OF, OR TRANSFERRED TO, AN "AFFILIATE" OF LENDER, A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN THE LOAN AGREEMENT.

UNITED STATES OF AMERICA STATE OF CALIFORNIA

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF OR ANY LOCAL AGENCY IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, ON, OR INTEREST ON THIS NOTE.

Rate of Interest Maturity Date Dated Date

$8,500,000

4.500% December 22, 2019 December 22, 2009

REGISTERED OWNER: SIEMENS PUBLIC, INC.

PRINCIPAL AMOUNT: EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS

THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY, an agency of the State of California (the "Authority'), for value received, hereby promises to pay (but only out of Revenues as h~reinafter provided) (a) to the order of SIEMENS PUBLIC, INC., (with its successors and assigris, the "Owner"), the principal sum of EIGHT MILLION FIVE HUNDRED THOUSAND DOLLARS ($8,500,000); (b) interest on the unpaid balance of such principal sum from and after the date of this Authority Note at the interest rate on the Loan (as hereinafter defined); and (c) interest on overdue principal, and to the extent permitted by law, on overdue interest, at the interest rate provided under the terms of the Loan Agreement. On December 22, 2019, all unpaid principal and accrued and unpaid interest on this Authority Note shall be due and payable in full.

This Authority Note has been executed and delivered by the Authority pursuant to a certain Loan Agreement, dated as of December 1, 2009 (the "Loan Agreement"), by and among Authority, Borrower and Siemens Public, Inc. ("Lender"). Terms used but not defined in this Authority Note shall have the meanings ascribed to such terms in the Loan Agreement.

The Lender has purchased this Authority Note and the Authority has loaned the proceeds of this Authority Note to the Borrower (the "Loan") pursuant to the terms of the Loan . Agreement. Proceeds of the Authority Note will be loaned to the Borrower for the Borrower to finance and refinance the Project.

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The Authority has agreed to pay the Authority Note (but only out of Revenues) by making Authority Loan Payments at the times and in the amounts set forth in the Loan Agreement.

The obligation of the Authority to make Authority Loan Payments is a special, limited obligation of the Authority, and such Authority Loan Payments are payable solely from the Loan Payments to be made by Borrower to Lender, as assignee of the Authority, under the Loan pursuant to the Loan Agreement and the Borrower Note, together with other moneys, including investment income on certain funds and accounts, including the Escrow Fund (the "Revenues"). Neither the faith and credit nor the taxing power of the State of California or any political subdivision thereof or any local agency is pledged to the payment of the principal of, premium, if any, on, or interest on this Authority Note.

The principal amount of this Authority Note and the Borrower Note outstanding from time-to-time shall bear interest at the applicable Interest Rate. Interest accruing on the principal balance of the Authority Note outstanding from time-to:-time shall be payable (but only out of Revenues) monthly in arrears and upon earlier demand in accordance with the terms of the Loan Agreement or prepayment in accordance with the Loan Agreement. ,

Authority shall pay to Lender Authority Loan Payments (but only out of Revenues), in the amounts and on the dates set forth in Exhibit A to the Loan Agreement with respect to the principal of the Authority Loan and interest on the Authority Loan as provided in Section 2.04 of the Loan Agreement. All payments to Lender shall become due at 1:00 p.m., Los Angeles time, on the day when due without presentment, demand, protest or notice of any kind. Such Authority Loan Payments shall be made in lawful money of the United States of America.

No recourse shall be had for the payment of the principal of, premium, if any, or interest on this Authority Note or for any claim based thereon or upon any obligation, covenant or agreement in the Loan Agreement, against any past, present or future member; director, officer, employee or agent of the Authority, or through the Authority, or any successor to the Authority, under any rule of law or equity, statute or constitution or-by the enforcement of any assessment or penalty or otherwise, and all such liability of any such member, director, officer, employee or agent as such is hereby expressly waived and released as a condition of and in consideration for the execution of the Loan Agreement and the issuance of this Authority Note.

No member, officer, employee or agent of the Authority, nor any individual executing this Authority Note, shall in any event be subject to any personal liability or accountability by reason of the issuance of this Authority Note.

Authority may, and in certain instances, shall be required to, prepay the Authority Loan and this Authority Not~ (but only out of Revenues) in accordance with the terms of the Loan Agreement.

It is hereby certified that all acts, conditions and things required to exist, to happen and be performed precedent to and in the issuance of this Authority Note, do exist, have happened and have been performed in due time, form and manner as required by the Constitution and statutes of the State of California.

2

·-··-----~----- --·-·· -·-·-·---····· . -- ·--~-------------------------------·-- _________ _, __________ .. ~~-

IN WITNESS WHEREOF, the Authority has caused this Note to be executed in its name and on its behalf.

Dated: December 22,, 2009

Attest: I /' f,

. I By t {)lf)t(;{ () . -

Gurbax Sahota, Assistant Secretary


//'

[Signature Page to Authority Note]·

Loan Agreement, dated as of December 1, 2009 by and among California Enterprise Development Authority,

Lorna Linda University Medical Center and Siemens Public, Inc.

AUTHORITY CLOSING CERTIFICATE

The undersigned, the Chair of the Board of Directors of the California Enterprise Development Authority, a public entity of the State of California, created pursuant to Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the Government Code of the State of California (the "Authority"), and the Secretary of the Board of Directors hereby certify that the following are now, and have continuously been since July 1, 2009, the duly appointed, qualified and acting members ofthe Board of Directors: ·

Title Name

Chair Wayne Schell Secretary Bruce Kern Member Cynthia Amador Member Patrick Collins Member Michael Mizrahi Member Kathy Millison Member Paul Saldana, CEcD Member Cindy Trobitz-Thomas

The undersigned further certify that they were duly authorized by ·.the Authority to execute, on behalf of Authority, various instruments, documents, and certificates, including, without limitation, the following documents:

(a) the Loan Agreement, dated . as of December 1, 2009 (the "Loan Agreement"), by and among the Authority, Lorna Linda University Medical Center (the "Borrower") and Siemens Public, Inc. (the "Lender"); and ·

(b) the Escrow Agreement, dated as of December I, 2009 (the "Escrow Agreement"), by and among the Authority, the Borrower, the Lender and Lorna Linda University, as escrow agent; and

(c) the Tax Regulatory Agreement, dated December 22, 2009 (the "Tax Regulatory Agreement"), by anq among the Authority and the Borrower; and .

(d) the Note, dated December 22, 2009 (the "Authority Note"), executed by the Authority for the benefit of the Lender.

The Loan Agreement, the Escrow Agreement, the Tax Regulatory Agreement and the Authority Note are collectively referred to herein as the "Authority Documents."

The undersigned further certify. that attached hereto as Exhibit A is a full, true and correct copy of the Resolution No. 09-16 duly adopted at a special meeting of the Authority duly

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duly held on November 18, 2009, at which meeting a quorum was present. The undersigned further certify that said copy is a full, true and correct copy of the original resolution adopted at said meeting and entered in the proceedings thereof; and that said resolution has not been amended, modified or rescinded in any manner since the date of its adoption, and the same is now in full force and effect.

The undersigned further certify that:

(a) the representations, warranties and covenants of the Authority contained in the Authority Documents are true and correct in all material respects on the date hereof with the same effect as if made on the date hereof; and

(b) the Authority has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under the Authority Documents at or prior to the date hereof.

Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Loan Agreement.

[Remainder of Page Intentionally Blank]

2

Dated: December22, 2009


[Signature Page of Authority Closing Certificate]

3

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EXHIBIT A



RESOLUTION OF THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY AUTHORIZING AND APPROVING' A LOAN AGREEMENT PURSUANT TO WHICH THE CALIFORNIA ENTERPRISE DEVELOPMENT AUTHORITY WILL MAKE A LOAN IN AN AMOUNT NOT TO EXCEED $8,500,000 FOR THE PURPOSE OF FINANCING OR REFINANCING THE COST OF THE ACQUISITION, CONSTRUCTION AND INSTALLATION OF CERTAIN FACILITIES AND IMPROVEMENTS FOR THE BENEFIT OF LOMA LINDA UNIVERSITY MEDICAL CENTER, PROVIDING THE TERMS AND CONDITIONS FOR SUCH LOAN AGREEMENT AND OTHER MATTERS RELATING THERETO HEREIN SPECIFIED

WHEREAS, pursuant to the provisions of the Joint Powers Act, comprising Articles 1, · 2, 3 and 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) ofthe Government Code of the State of California (the "Act"), the cities of Eureka, Lancaster and Selma entered into a joint exercise of powers agreement (the "Agreement") pursuant to which the California Enterprise DevelopmentAuthority (the "Authority") was organized;

WHEREAS, the Authority is authorized by the. Agreement and the Act to issue bonds, notes or other evidences of indebtedness, or certificates of participation in leases or other agreements, or enter into loan agreements to, among other things, finance or refinance facilities owned and/or leased and operated by organizations described in Section 501(c)(3) ofthe Internal Revenue Code of 1986, as amended (the "Code");

WHEREAS, pursuant to the provisions of the Act, the public agencies which are members of the Authority are authorized to jointly exercise any power common to such public agency members, including, without limitation, the power to acquire and dispose of property, both real and personal; and

WHEREAS, the County of San Bernardino (the "County") is an associate member of the Authority and is authorized to acquire and dispose of property, both real and personal, and

WHEREAS, pursuant to the provisions of the Act, the Authority may, at its option, issue bonds, rather than certificates of participation, and enter into a loan agreement for the purposes of promoting economic development; and

WHEREAS, Lorna Linda University Medical Center is a nonprofit religious corporation duly organized and existing under the laws of the State of California (the "Borrower"), has submitted an application to the Authority requesting the Authority to make a loan (the "Borrower Loan") in the aggregate principal amount not to exceed $8,500,000 to the Borrower for the purpose of financing or refinancing the cost of, or reimbursing the Borrower for, (1) the acquisition of a medical office building located at 25455 Barton Road, Lorna Linda, California, (2) the acquisition, construction, installation and

I -

equipping of certain capital improvements to Borrower's facilities located at 11234 Anderson Street, 25333 Barton Road, 25455 Barton Road, 11406 Lorna LindaDrive, 11370 Anderson Street, and 11375 Anderson Street, Lorna Linda, California, 26780 Barton Road, 1686 Barton Road, 1690 Barton Road, and 1710 Barton Road, Redlands, California and 900 East Washington Street, Colton, California, and (3) the payment of certain costs of issuance in connection with the Borrower Loan (collectively, the "Project"); and

WHEREAS, the Authority intends to use the proceeds of a tax-exempt loan from Siemens Public, Inc. or a related entity (the "Lender") to the Authority (the "Authority Loan") to make the Borrower Loan; and

WHEREAS, there has been filed with the Secretary of the Authority a proposed form of a (i) Loan Agreement (the "Loan Agreement"), by and among the Authority, the Borrower and the Lender, including a form of note and a form of schedule attached thereto, and (ii) Escrow Agreement (the "Escrow Agreement"), by and among the Authority, the Borrower, the Lender and Lorna Linda University, an affiliate of the Borrower, as escrow agent (the "Escrow Agent"); and

WHEREAS, in accordance with the requirements of Section 147(f) ofthe Code, the Board of Supervisors of the County adopted, on June 9, 2009, a resolution approving the Authority Loan in order to finance the Project; and

WHEREAS, the Project is expected to provide significant benefits to the residents of the County through the services provided by the Borrower;

NOW THEREFORE, BE IT RESOLVED by the BoardofDirectors ofthe California Enterprise Development Authority, as follows:

Section l.The Authority finds that it is in the public interest to assist the Borrower in financing the Project.

Section 2.The Authority hereby approves of the entering into the Authority Loan on a tax-exempt basis and using the proceeds thereof to make the Borrower Loan pursuant to the terms and provisions of the Loan Agreement. The Authority understands that the payments under the Borrower Loan will be assigned to the Lender to satisfy the Authority's payments under the Authority Loan. The payments to be made by the

· Authority to the Lender under the Authority Loan will be satisfied solely from payments made by the Borrower to the Lender (as assignee of Authority) under the Borrower Loan.

Section 3.The proposed form of a Loan Agreement by and among the Lender, the A~1thority and the Borrower, on file with the Secretary of the Authority, is hereby approved. The Chairman or the Vice Chairman of the Board of Directors, or the Executive Director of the Authority (individually, an "Authorized Signatory" and, collectively, the "Authorized Signatories"), acting alone, is hereby authorized and directed, for and in the name and on behalfof the Authority, to execute and deliver the Loan Agreement in substantially the form filed with the Authority prior to this meeting, with such changes and insertions therein consistent with the stated terms of this Resolution as the Authorized Signatory executing the same, with the advice of counsel to the Authority, may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof. ·

Section 4. The proposed form of an Escrow Agreement by and among the Authority, the Borrower, the Lender and the Escrow Agent, on file with the Secretary of the Authority, is hereby approved. The Authorized Signatories, acting alone, are hereby authorized .and directed, for and in the name and on behalf of the Authority, to execute and deliver the Escrow Agreement in substantially the form filed with the Authority prior to this meeting, with such changes and insertions therein consistent with the stated terms of this Resolution as the Authorized Signatory executing the same, with the advice of counsel to the Authority, may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof.

Section S.The proposed form of note (the "Authority Note"), to be executed by the Authority and delivered to the Lender; as filed with the Authority prior to this meeting, is

. hereby approved. The Authorized Signatories, acting alone, are hereby authorized and dtrected, for and on behalf and in the name of the Authority, to execute, acknowledge and deliver to the Lender the Authority Note in substantially the form filed with the Authority, with such changes and insertions therein consistent with the stated terms of this Resolution as the Authorized Signatory executing the same, with the advice of counsel to the Authority, may require or approve, such approval to be conclusively evidenced by the execution and delivery thereof.

Section 6.The Authority approves the Authority Loan on a tax-exempt basis and the making of the Borrower Loan to the Borrower in an amount not to exceed $8,500,000 in accordance with the terms of and to be secured by the Loan Agreement. Repayment of the principal of, ·premium, if any, and the interest on, the Authority Loan shall be made solely from the revenues to be received by the Authority from the Borrower Loan pursuant to the Loan Agreement, and the Authority Loan shall not be deemed to constitute a debt or liability of the State or any political subdivision thereof. The Authority Loan shall bear interest at the rate or rates set forth in the Loan Agreement.

Section 7.All assignments, cons~nts, approvals, notices, orders, requests and other actions permitted or required by any of the documents authorized by this Resolution, whether before or after the borrowing of amounts from the Lender and the making of the Borrower Loan to the Borrower, any of the foregoing which may be necessary or desirable in connection with any default under or amendment of such documents, any transfer or other disposition of the Project, any assignment by Lender to an affiliate of

· Lender or qualified institutional buyer or any prepayment of the Borrower Loan, may be given or taken by the Chairman or the Executive Director or any deputy of either of them without further authorization by this Board of Directors of the Authority, and such

I

officers are hereby authorized and directed to give any such consent; approval, notice, order or request and to take any such action which such officers niay deem necessary or desirable to further the purposes of this Resolution.

Section S.All actions heretofore taken by the officials and agents of the Authority with respect to the Authority Loan borrowing of funds from the Lender and the Borrower Loan to the Borrower are hereby approved, confirmed and ratified, and the officials of the Authority and their authorized designees are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all certificates, agreements and documents, including, without limitation, a tax certificate and agreement and security assignment agreements, which they or bond counsel may deem necessary or

a~visable in order to consummate the Borrower Loan and the Authority Loan and otherwise to effectuate the purposes of this Resolution.

The provisions of this Resolution are hereby declared to be separable, and if any action, phrase or provision is for any reason declared to be invalid, such declaration does not affect the validity of the remainder of the sections, phrases and provisions.

This Resolution shall take effect from and after its adoption.

----------------- --- ----- - ----------------

PASSED AND ADOPTED this 18th day ofNovember, 2009.

ATTEST: /. /

G -JJ~

Secretary

CALIFORNIA ENTERPRISE. DEVELOPMENT AUTHORITY

I, the undersigned, the duly appointed and qualified Secretary of the California Enterprise Development Authority, do hereby certify that the foregoing resolution was duly adopted by the Board of Directors of said Authority at a duly called meeting of the Board of Directors of said Authority held in accordance with law on November 18, 2009.

~· )dj;_~ '''h ~/' Gurb4tant Secretary ~

$8,500,000

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED

NOTE

December 22, 2009 · No.1

LOMA LINDA UNIVERSITY MEDICAL CENTER, a limited liability company duly . organized and validly existing under the laws of the State of California ("Borrower"), for value received, hereby promises to pay the CALIFORNIA· ENTERPRISE DEVELOPMENT AUTHORITY, an agency of the State of California ("Authority"), the (a) principal sum of EIGHT MILLION·FIVE H~DRED THOUSAND DOLLARS ($8,500,000), (b) interest on the unpaid balance of such principal sum from and after the date of this Note at the interest rate on the Loan (as defined in the hereinafter identified Loan Agreement) and (c) interest on overdue principal, and to the extent permitted by law, on overdue interest, at the interest rate provided under the terms of the Loan Agreement.

This Note has been executed and delivered by Borrower pursuant to a certain Loan Agreement, dated as of December 1, 2009 (the "Loan Agreement"), by and among Authority, Borrower and Siemens Public, Inc. ("Lender"). Terms used but not defined in the Loan Agreement shall have the meanings ascribed to such terms in the Loan Agreement.

Authority has loaned to Borrower (the "Loan") the amount of $8,500;000 received from Lender pursuant to the terms . of the Loan Agreement. Proceeds of the Loan will be used by . Borrower to finance and refinance (1) the acquisition of the real property and improvements located at 25455 Barton Road, Lorna Linda, California and (2) the acquisition, construction, installation and equipping of certain capital improvements to Borrower's facilities. Borrower has agreed to repay such Loan by making Loan Payments at the times and in the amounts set forth in the Loan Agreement. The Loan has been made concurrently with the execution and delivery ofthis Note.

Interest accruing on the principal balance of the Loan outstanding from time to time shall be payable monthly and upon earlier demand in accordance with the terms of the Loan Agreement or prepayment in accordance with the Loan Agreement.

Borrower shall pay to Lender, as assignee of Authority, Loan Payments, in the amounts and on the dates set forth in Exhibit A to the Loan Agreement with respect to the principal of the Loan and interest on the Loan as provided in Section 2.04 of the Loan Agreement. All payments to Lender shall become due at 1 :00 p.m., Pacific Time, on the day when due without presentment, demand, protest or notice of any kind. Such Loan Payments shall be made in lawful money ofthe United States of America.

' The obligations of Borrower to make the Loan Payments required under the Loan

·.Agreement and to make other payments under the Loan Agreement and this Note and to perform and observe the covenants and agreements contained in the Loan Agreement, including the obligation to make all Additional Payments, shall be absolute and unconditional in all events, without abatement, diminution, deduction, setoff or defense for any reason, including (without

pbrubake

Text Box

2009-1425

limitation) any failure of any component of the Project to be delivered or installed, any defects, malfunctions, breakdowns or infirmities in the Project or any accident, condemnation, destruction or unforeseen circumstances.

Borrower may, and in cert~in instances, shall be required to, prepay the Loan and this Note in accordance with the terms of the Loan Agreement.

Borrower hereby certifies that all acts, conditions and things required to exist, to happen and be performed precedent to and in the issuance of this Note, exist, have happened and have been performed, and that the issuance of this Note has been duly authorized by Borrower.

2

IN WITNESS WHEREOF, Borrower ha.S executed this; Note as of the date first above written.


[Signature Page to Borrower Note]

ENDORSEMENT AND ASSIGNMENT

FOR VALUE RECEIVED, the California Enterprise Development Authority ("Authority"), hereby endorses and sells, assigns and transfers unto Siemens Public, Inc., as lender ("Lender") under the Loan Agreement, dated as of December 1, 2009, by and among Authority, Lender and Lorna Linda University Medical Center, the, within Note and all of

. Authority's right, title and interest under the Loan Agreement, except Authority's fights to payment of expenses, the rights of Authority to indemnification and the rights of notice, inspection and consent.

IN WITNESS WHEREOF, the undersigned have set their hands as of the 22nd day of December, 2009.

By~~=-~~~~~~~~~~------Wayne SchellfChair

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